Issue 3, 2013

Volkov D. L., Nikulin E. D. Earnings Management in a Company’s Activities: Theoretical Approaches and Empirical Studies.

The article reviews the main theoretical and empirical studies on the issues of a company’s earnings management. The main characteristics of the earnings management process are stipulated and the preconditions of this activity are defined. The paper also provides evidence that earnings management can be divided into fraudulent (contradicting the legislation) and legal (falling within GAAP) actions. Legal earnings management can be conducted via two groups of methods: accrualbased and real operations-based. As a result of an analysis of national and foreign specialists’ papers the main directions for research on earnings management are defined. They include, firstly, empirical testing of earnings management theories; secondly, the analysis of scope of use of different methods of earnings management; thirdly, defining accounting measures that are most frequently used in earning management; fourthly, the analysis of factors that limit earnings management. Keywords: earnings, earnings management, financial reports, manipulation.

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