EARNINGS MANAGEMENT TECHNIQUES IN ACCOUNTING LITERATURE

Earnings management received substantial attention from the accounting academicians. There are three types of earnings management methodsin the literature as: accrual management, real earnings management and classification shifting. In this study firstly research designs to detect earnings management that are commonly employed in the literature are mentioned. Accrual management can be measured in three ways; a) aggregate accruals method, b) studies based on specific accruals, and c) studies based on the distribution of earnings after management. For real earnings management the models developed by RoyChowdhury (2006) to detect; the reduction of discretionary expenditure, sales manipulation by accelerating the timing of sales through price discounts or more lenient credit terms, and overproduction to cut prices or to decrease COGS (Cost of Goods Sold), are mentioned. Lastly classification shifting model developed by McVay (2006) to detect misclassification of core expenses as special items is mentioned briefly. Additionally the motives behind the earnings management are mentioned briefly by giving reference to the studies in the literature