A Review of Earnings Management Literature
Abstract
This review seeks to provide an overview of the earnings management literature, synthesizing a wide array of studies spanning several years. Earnings management, a critical aspect of financial reporting, has been extensively examined in accounting and finance due to its implications for stakeholders, including shareholders, creditors, regulators, and analysts. By systematically reviewing a diverse body of research, this study aims to uncover underlying patterns, theoretical frameworks, methodological approaches, and key empirical findings within the earnings management research stream. The main contributions of the review are (1) its evaluation of the extant earnings management literature, (2) at least two testable earnings management propositions, and (3) the suggestions for future research. Overall, earnings management research has made significant strides in unraveling the complexities surrounding financial reporting behaviors and practices. By continuing to building upon this foundation, future research can enhance further the transparency and integrity of financial markets, thus ultimately fostering greater trust and confidence among investors, creditors, and other stakeholders in the corporate ecosystem.