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      Earnings Management: Obvious Phenomenon in Albanian Market

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          Abstract

          Fiscal earnings, measures the performance of the company during the financial year. Motivated by different factors such as those related to the capital market, contractual motives etc, managers can manipulate earnings, increasing or reducing them and this phenomenon is recognized as “earnings management”. If we accept that the initiatives of “earnings management” lead to distortion of the financial results, it means that financial reports can be considered as poor quality reports, and financial information provided to the users and various parties of interest is also of poor quality. This paper is focused on reviewing the existing literature with regard to the Earnings Management in response to the growing pressure of investors, policy makers, and companies’ governance reform mechanisms to curb opportunistic behavior of the managers of these companies. It also examines the existence of this phenomenon in Albanian context as well as tests the importance of Modified Jones Model as an efficient tool for detection of abnormal accruals, used as a proxy for earnings management. The results show that firms in the Albanian market are engaged in earnings management initiatives.

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          Author and article information

          Journal
          Academicus : International Scientific Journal
          Academicus Journal
          01 July 2013
          : MMXIII
          : 8
          : 78-88
          Article
          a0c14e7e4f5942db8c76e38ac5d8f93c
          10.7336/academicus.2013.08.03

          Distributed under the terms of the https://creativecommons.org/licenses/by-nc-nd/4.0/, which permits noncommercial use and distribution in any medium, provided the original author(s) and source are credited, and the original work is not modified.

          Product
          Categories
          Social Sciences
          H
          Economics as a science
          HB71-74

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