The Fundamental of Earnings Management

In: Business and Management

Submitted By EMLEVANA
Words 1778
Pages 8
With the rapid development of society and economy, the earning management in capital market becomes one of the hottest issues of general public. Earnings management actually is a process that the management of the firms control the financial report. In this research paper, I will talk about the fundamental of the earnings management, it including the concept and the feature of the earning management as well as the effect of the earnings management.

Concept of earnings management……………………………………………………..4
Feature of earnings management……………………………………………………...5
Patterns of earnings management……………………………………………………..6
Evidence of earnings management for bonus purpose…………………….................7
Other motivations for earnings management……………………………………........8
The good and bad side of earnings management……………………………..............9

1. Concept of earnings management

Since the 80s of 20th century, earnings management became a hot research subject in the international economics and accounting educational circles, the financial reporting and a contracting perspective can be viewed related to this hot subject. An accurate understanding of earnings management is very important to accountants, because it related to the understanding the usefulness of net income which will be reported to the investors. American accounting scholars Scott believe that “earnings management is the choice by a manager of accounting policies so as to achieve specific objectives”. Based on the different discussion, a definition of literature described from Healy and Wahlen is that “Earnings management occurs when managers use judgment in financial reporting and in structuring…...

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