Zynga Makes Free-To-Play Games and Gets Revenue from the Sale

question 56

Essay

Zynga makes free-to-play games and gets revenue from the sale of virtual goods for things like extending play sessions, personalizing game environments, accelerating game progress and sending gifts to friends. The company experienced deep declines in its user base during 2011-2013. At one point, plaintiffs in a lawsuit charged that Zynga executives falsely pumped up revenue and prospects so that insiders and underwriters could dump $593 million in personally-held stock.
The lawsuit alleges that the company changed its accounting methods shortly before the initial public offering to inflate short term earnings while executives hid emerging problems. Assuming the charges are true, do you believe Zynga management engaged in earnings management? How do you evaluate the ethics of its actions?

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Definitions:

Sexual Experiences

Engagements or encounters that involve sexual activities, exploration, and behaviors, contributing to an individual's sexual health and identity development.

Crisis/Exploration

A critical phase or moment of exploration, often leading to significant change or development.

Commitment

The state or quality of being dedicated to a cause, activity, or relationship.

Identity Integration

The process of combining various aspects of one's self-concept into a cohesive and comprehensive identity.