EARNINGS MANAGEMENT AND FINANCIAL PERFORMANCE

ABSTRACT

Earnings management, a ubiquitous practice in corporate finance, remains a topic of enduring interest for researchers, practitioners, and regulators alike. This study delves into the intricate relationship between earnings management and financial performance, exploring the various dimensions and consequences of this phenomenon. This abstract provides a concise overview of the study's core findings and key insights. The research examines the multifaceted nature of earnings management, encompassing both accrualbased and real earnings management strategies, and dissects the underlying motivations driving these actions. The study also considers the impact of corporate governance mechanisms and regulatory environments on the prevalence and effectiveness of earnings management. It elucidates the potential short-term and long-term consequences, such as effects on profitability and stock price volatility. The study scrutinizes the ethical and legal dimensions of earnings management and its repercussions on a firm's reputation and stakeholder trust. This study offers valuable insights into the intricate interplay between earnings management and financial performance. It not only advances our understanding of the motives and methods behind earnings management but also sheds light on the ramifications for firms, investors, and regulators. The findings of this research, the independent variables (accrual-based earnings management, real activities EM, abnormal cash flows, abnormal cost of production) has insignificant relationship on the dependent variable (return and asset).