Earnings Management In Accounting

Introduction
Earnings management is a popular project that studied by fields of both economy and accounting. Although the concept of earnings management is still controversial in the accounting fields, the basic purpose can be concluded from the two authority definitions by Scott (n.d.) and Schipper (n.d.).
According to Scott (n.d.), a scholar of accounting in America, earnings management refers to the behaviors that allowed by GAAP standard, maximizing the self-interest of managers or the enterprise market value by selecting accounting policy.
Schipper (n.d.) stated another theory; he indicated that earnings management is actually a disclosure management by which managers can obtain self-interest by purposeful control of finance disclosing procedures.
In other words, according to the authority definitions have just mentioned, the specific concept of earnings management should be:
The subjects of earnings management are the board of directors and managers. Although there are some distinctions of their motivation to engage in earnings management, they determine the information disclosure together.
The objective of earnings management is the accounting income disclosed in the external financial reporting.
The method of earnings management is realizing the control and adjustment of accounting by using accounting and non-accounting measures that are allowed by GAAP standard.
The purpose of earnings management is to maximize the self-interests of the subjects mentioned above.
Earnings management, a behavior of obtaining self-interest, is encouraged by the motivation of its subjects all the time. At the same time, a lot of researches that link it to other elements have been conducted, including some elements of financial crisi...

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... just a proxy to measure the level of earnings management through discretionary accrual. There is no certain conclusion on the best method to find the level of earnings management as it cannot be directly observed. There are other methods like earnings distribution model. On the other hand, the Jones model this research is using a modified Jones Model. Other variables can be added, including return of asset, and Tobin’s Q to make the research more valid. There is different definition to calculate leverage ratio.
During the selecting of the firm, we have tried to include company in different industry to make research more valid. However, we have ignored some of the factors that may affect the level of earnings management, for example, the experience of the directors and the age of the company. Further research need to be done to test related variables.
Conclusion