Document Type : Case Study


Department of Accounting and Information Systems, University of Dhaka, Shahbag, Dhaka, Bangladesh


This research investigates the behavior of the managers of the Bangladeshi firms in applying Earnings manipulation through the technique of Accruals Earnings Management (AEM). This study examines whether the firm managers of Bangladesh involve themselves in earnings manipulation in the form of accruals earnings management that whether they beat of meat the earnings benchmarks in the context of Return on Assets, Changes in Return on Assets, Earnings per Shares and Changes in Earnings per Shares. The modified Cross Sectional Jones (1991) model has been applied to estimate the proxy for accruals earnings management (Abnormal Accruals) by using a 1652 firm-years observations of 168 companies of 10 industries (excluding Banking Industry, Financial Institutions, Insurance Industries and Telecommunication industries) over the 15 years from 2002 to 2016. Managers of other variables of accruals earnings management activities, this research reports that there is no evidence of earnings manipulation in the form of accruals earnings management from the evidence from Bangladeshi firms.


Adhikari, A., Derashid, C., & Zhang, H. (2005). Earnings Management to Influence Tax Policy: Evidence from Large Malaysian Firms. Journal Of International Financial Management And Accounting, 16(2), 142-163.
Ahmed, H., & Azim, M. (2015). Earnings Management Behavior: A Study on the Cement Industry of Bangladesh. International Journal Of Management, 2(4), 265-276.
Ayers, B., Jiang, J., & Yeung, P. (2006). Discretionary Accruals and Earnings Management: An Analysis of Pseudo Earnings Targets. The Accounting Review, 81(3), 617-652.
Bartov, E., Gul, F., & Tsui, J. (2000). Discretionary-Accruals Models and Audit Qualifications. SSRN Electronic Journal, 30(3), 421-452. 10.2139/ssrn.214996
Bhuiyan, M. (2015). Earnings Management to Exceed Earnings Threshold: Evidence from Bangladesh. Journal Of Business Studies, 36(3), 1-22
Charoenwong, C., & Jiraporn, P. (2008). Earnings Management to Exceed Thresholds: Evidence from Singapore and Thailand. SSRN Electronic Journal.
Cohen, D., & Zarowin, P. (2008). Accrual-Based and Real Earnings Management Activities Around Seasoned Equity Offerings. SSRN Electronic Journal.
DeFond, M., & Jiambalvo, J. (1994). Debt covenant violation and manipulation of accruals. Journal Of Accounting And Economics, 17(1-2), 145-176.
Demski, J. (1988). Positive accounting theory: A review. Accounting, Organizations And Society, 13(6), 623-629.
GERAKOS, J. (2012). Discussion of Detecting Earnings Management: A New Approach. Journal Of Accounting Research, 50(2), 335-347.
Graham, J., Harvey, C., & Rajgopal, S. (2005). The Economic Implications of Corporate Financial Reporting. SSRN Electronic Journal. ssrn.491627
Graham, R., & King, R. (2000). Accounting Practices and the Market Valuation of Accounting Numbers: Evidence from Indonesia, Korea, Malaysia, the Philippines, Taiwan, and Thailand. The International Journal Of Accounting, 35(4), 445-470.
Hribar, P., & Collins, D. (2002). Errors in Estimating Accruals: Implications for Empirical Research. Journal Of Accounting Research, 40(1), 105-134.
Khan, A., & Akter, M. (2017). An Analysis of Earnings Management: Evidence from Food & Allied Industry of Bangladesh. International Journal Of Accounting And Financial Reporting, 7(2), 359.
Koonce, L., & Mercer, M. (2002). Using Psychology Theories in Archival Financial Accounting Research. SSRN Electronic Journal. ssrn.311105
Kraft, A., Leone, A., & Wasley, C. (2007). Regression-Based Tests of the Market Pricing of Accounting Numbers: The Mishkin Test and Ordinary Least Squares. SSRN Electronic Journal.
Lee, C. (2001). Market Efficiency and Accounting Research: A Discussion of 'Capital Market Research in Accounting' by S.P. Kothari. SSRN Electronic Journal.
McNichols, M. (2000). Research design issues in earnings management studies. Journal Of Accounting And Pblic Policy, 19(4-5), 313-345. s0278-4254(00)00018-1
Scott, W. (2014). Financial accounting theory. Toronto: Pearson.
Trent, W. (2006). CEO Incentives and Earnings Management. CFA Digest, 36(4), 18-19.