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Earnings Management

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Earnings Management Paper

Earnings Management Paper will be graded out of 100 points. Grading will be based on the

technical merit, completeness, professionalism, and clarity.

As you have studied in financial accounting courses, managers of companies have much flexibility

in financial reporting, since U.S. GAAP allows flexibility in their accounting choices (e.g., LIFO

vs. FIFO) and many numbers on financial statements are generated based on assumptions and

estimates (e.g., allowance for doubtful accounts). Such flexibility is given to managers based on

the belief that managers would use flexibility to make financial reporting more useful for financial

statement users. However, managers of some companies abuse flexibility for the benefit of

companies or even themselves. Especially, they distort earnings to window-dress performance of

their companies, and, thereby, deter reliable and transparent financial reporting.

For Earnings Management Paper, you will read professional articles, and/or academic research

papers to understand various aspects of earnings management. Based on those reference papers

and your own further research (if needed), you will write Earnings Management Paper using the

structure given below. For your reference, I describe what should be included in each section.

Title of each section for the main body of Earnings Management Paper (Please

refer to EM 1, EM 2, EM 3, EM 4, wherever needed):

1. Introduction

• What is the objective of your Earnings Management Paper?

• How is your Earnings Management Paper structured to support the objective?

2. Definition of earnings management

• Define earnings management.

• How would you distinguish between earnings management and earnings

manipulation (i.e., fraudulent financial reporting)? Please use specific examples or

evidence to support your argument. For examples and/or evidence, you may need

to conduct your own research.

2

3. Motivations for earnings management

• Discuss motivations for earnings management.

4. Classification of earnings management

• How would you classify earnings management? For each classification, please

provide a specific example or evidence. For an example and/or evidence, you may

need to conduct your own research.

5. Techniques of earnings management

• Discuss earnings management techniques. For each technique, please provide a

specific example. For an example and/or evidence, you may need to conduct your

own research.

6. Conclusion

• In your own words, describe and reiterate what your Earnings Management Paper

is about.

Additional Notes:

(1) Include a cover page where title, last name, first name and ID are clearly indicated.

(2) Create the title: You can choose any title that can highlight your thoughts.

(3) Add “References” right after the main body where you list up the articles, academic

research papers and other materials you used to complete the paper.

(4) Double-spaced 10 pages or less (1″ margin for all sides) excluding cover page and

references.

(5) 12-point Times New Roman.

(6) Due February 19, 2024 (Mon) – NO LATE SUBMISSION: E-mail submission only by

12:55pm.

(7) You must complete the paper without taking help from any other fellow students or

another people.

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