Real Earnings Management: The New Strategy for Earnings Manipulation
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Abstract
Real earnings management is one of the earnings management strategies in which managers employ to increase reported earnings. By using this method, operational activities will be manipulated throughout operational policies. Although real earnings management is dissimilar to accruals-based earnings management, the results from employing this technique would impact economic transactions and erode the quality of reported earnings. Empirical research in the field of earnings management indicates that the practice of real earnings management has been increased recently after the increasing of governance regulations. Those results emphasize the importance of real earnings management and highlight that one set of governance mechanisms may not be able to reduce the incentive of managers to not engage in all choices of earnings management strategies. This information is crucial for regulators to design proper regulations for controlling different choices of earnings management.
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The articles published in the journals are the authors' opinions, not the opinion of the editorial team or administrative staff. The articles published is copyright of the Journal of Business Administration and Accounting, Khon Kaen University.
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