Earnings management in developed and developing countries: A review of recent literature
Over the years, opportunistic earnings management practice generates reliable accounting earnings in a smaller amount which could not produce the fair and true firms’ financial performance. Earnings management is most probably to decrease the quality in usefulness for investment decision and repor...
Saved in:
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
2019
|
| Subjects: | |
| Online Access: | http://eprints.unisza.edu.my/6309/1/FH02-FPP-19-27471.pdf http://eprints.unisza.edu.my/6309/ |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | Over the years, opportunistic earnings management practice generates reliable accounting earnings in a
smaller amount which could not produce the fair and true firms’ financial performance. Earnings
management is most probably to decrease the quality in usefulness for investment decision and reported
earnings, therefore, decreasing the confidence of investor on the financial reports. Though, accounting
earnings have been more consistent with high quality while the manager’s opportunistic behavior is
changed by applying monitoring system. Therefore, regulatory bodies of the stock market and other
agencies are more concerned with the earnings management, particularly, after collapsing of current
numerous firms to which were reported increasing the independence of external auditors and corporate
governance. Its main objective is not only to directly expand corporate performance but also to resolve
agency problems by making parallel management and shareholders’ interests. Earnings management, as for
as the literature concerned is very rich and resolve the problems of earnings management such as type of
earnings management, corporate governance practices and also numerous elements disturbing earning
management. Past studies have also been recognized the constraints on earnings management and the
impact of incentives which could be divided into two groups. The first group examines corporate
governance, ownership structure and audit quality as constraints while the second group studies leverage
and free cash flow as incentives. This study discusses the literature of earnings management and also
discusses the suitable gap from the literature of earnings management in both developed and developing
countries. The contribution of this study is to highlight the complication in issues of earnings management in
reporting of financial corporate and gives a way for further study on decreasing earnings management
practices. |
|---|