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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.
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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.
