A Review on the Measurement Models of the Earnings Management: Discretionary Accruals –based Models and Discretionary Revenues-based Model

Document Type : Original Article

Authors
Allahkaram Salehi 1
Borzoo Salehi 2
1 Department of Accounting, Islamic Azad University, Masjed-soleiman Branch, Masjed-soleiman, Iran
2 Department of Accounting, Islamic Azad University, Persian Gulf International Educational Branch, Khuzestan, Iran
Abstract
Earnings Management is a specialized accounting issue which particularly has been considered in the center of the accounting research more than 50 years.  Based on conducted empirical researches so far, earnings management has been interpreted in different ways. All of these perceptions have been rooted in the positive accounting theory and freedom of accountants to choose different accounting methods. Although most of previous researches in the domain of earnings management have been done to detect and measure discretionary accruals, recently, financial researchers, addressing the newer models called discretionary revenues-based models. This paper evaluates both these models to measure earnings management. At first, the history of accounting researches in earnings management has been reviewed, then, definitions as well as different applications of earnings management models have been discussed
Keywords
earnings management
Discretionary Accruals
discretionary revenue