Income Statement Quality of Earnings Companies have incentives to manage income to meet or beat Wall Street expectations,so that the market price of stock increases and the value of stock options increase. Quality of earnings is reduced if earnings management results in information that is less useful for predicting future earnings and cash flows. Chapter 4-6 LO 1 Understand the uses and limitations of an income statement.Chapter 4-6 Companies have incentives to manage income to meet or beat Wall Street expectations, so that the market price of stock increases and the value of stock options increase. Quality of earnings is reduced if earnings management results in information that is less useful for predicting future earnings and cash flows. Quality of Earnings