Auditing, Earnings Management, Governance

Corporate managers routinely make discretionary choices in how they record revenues, expenses, and accruals, and a large body of research examines when those choices reflect genuine economic judgment versus attempts to present a more favorable picture to investors, lenders, or regulators—a practice known as earnings management. Whether that behavior is constrained depends on the design of governance structures such as audit committees, the quality of external auditing, and the transparency requirements imposed by reporting standards like IFRS. Because outside investors rarely have the same information as insiders, information asymmetry sits at the center of the field's concerns: it shapes how markets price securities, how analysts form forecasts, and how much leeway managers actually have to obscure underlying performance. Active research continues to debate how effectively mandatory IFRS adoption has harmonized accounting quality across countries, and whether stronger governance mechanisms genuinely reduce opportunistic reporting or simply shift it into less observable forms.

Works

124,529

Total citations

2,139,326

Keywords

Earnings ManagementFinancial ReportingAudit CommitteeAccounting QualityCorporate GovernanceAccruals Quality