Real Earnings Management: A Review of Literature and Future Research

  • Belal Ali
  • Hasnah Kamardin


In recent years, increasing attention has been given to real earnings management (REM) as an alternative method to accrual-based earnings management. This paper reviews the recent studies on REM to provide updated and comprehensive information about this type of earnings management. Specifically, the review focuses on REM definitions, motivations, techniques, consequences, and measurement. In addition, the paper provides a discussion of the theoretical frameworks used by researchers as underpinning theories of earnings management. The review of the literature showed that companies have shifted earnings management practising from accruals-based to real activities based. Useful suggestions for REM research opportunities are also provided.

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