Opportunities, motivations and approaches of earnings management: a structured theoretical review of the corporate virus
by Apedzan Kighir; Normah Omar; Norhayati Mohamed
International Journal of Auditing Technology (IJAUDIT), Vol. 1, No. 3/4, 2013

Abstract: This paper presents a theoretical review of empirical evidences concerning earnings management from the perspective of opportunities and approaches utilised by earnings managers and the motivational forces driving and sustaining the practice. Most contributions in the area of earnings management focus on diagnosis of the earnings management through modelling, which is towards curative rather than prevention. This main objective of the review is to try and draw the attention of researchers to the preventive perspective of earnings management as there is a saying that prevention is better than cure. The research employs content analysis and reviewed articles on three main contending paradigms on earnings management; opportunities, motivations and approaches used by earnings managers. This research presents 26 opportunities and 57 approaches utilised by earnings managers and 38 motivational forces and incentives sustaining earnings management. The research concludes that the war against earnings management should start from the causes, followed by prevention and then curative where immunisation cannot prevent the infection. This would block the gate of earnings managers, seal the incentive channels, eliminate or at least reduce to the barest minimum the motives of the dreaded corporate virus called earnings managers.

Online publication date: Mon, 25-Nov-2013

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