Analysis on Factors Influencing Managers' Earnings Management Intentions

Earnings management behavior has historically been a great concern in the accounting profession. The purpose of this paper was to examine factors influencing managers' assessment on the appropriateness of an accounting treatment and intentions of earnings management. This paper was divided into four sections. In the first section, we defined the concept of earnings management by reasoning and analyzing previous researches. In the second section, we examined ethical factors that affect earnings management. Analysis of economical factors that affects earning management was established in the third and fourth section - we mainly discussed influences of management compensation in the third section and capital market incentives in the last section. This paper addressed the issue of earnings management from the individual level to measure the managements' intention to manage earnings. The authors believed that earnings management should be discouraged because the financial statement was supposed to provide real performance of the company to users.