Review of Real Earnings Management Literature

Journal of Accounting Literature, Vol. 26, pp. 195-228, 2007

Posted: 8 Apr 2011 Last revised: 24 Jul 2013

See all articles by Zhaohui Randall Xu

Zhaohui Randall Xu

University of Houston, Clear Lake

Gary K. Taylor

University of Alabama - Culverhouse College of Commerce & Business Administration

Michael T. Dugan

University of Alabama

Date Written: December 31, 2007

Abstract

This paper summarizes the growing body of literature on the unique aspects of real earnings management as compared with accruals earnings management. Unlike accruals earnings management, real earnings management involves real business activities, consumes resources, and potentially affects future operating performance. This paper identifies studies that investigate earnings management via the manipulation of operating, investing and financing activities. This paper also discusses the associated costs and consequences of these manipulations, reviews investors’ reactions to real earnings management, and discusses the relations between accruals and real earnings management.

Keywords: real earnings management, literature review

Suggested Citation

Xu, Zhaohui Randall and Taylor, Gary Kenneth and Dugan, Michael T., Review of Real Earnings Management Literature (December 31, 2007). Journal of Accounting Literature, Vol. 26, pp. 195-228, 2007, Available at SSRN: https://ssrn.com/abstract=1803686

Zhaohui Randall Xu (Contact Author)

University of Houston, Clear Lake ( email )

2700 bay area blvd,
box 42
Houston, TX 77058
United States
281-283-3145 (Phone)

Gary Kenneth Taylor

University of Alabama - Culverhouse College of Commerce & Business Administration ( email )

Box 870223
Dept. of Accounting
Tuscaloosa, AL 35487-0223
United States

Michael T. Dugan

University of Alabama ( email )

Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States
205-348-2902 (Phone)
205-348-8453 (Fax)

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