(Nazarbayev University Graduate School of Business, 2023) Yeleussizova, Aigerim; Kassymbekova, Aigerim
For investors, board of directors and other stakeholders, earnings appear to
be one of the most important items in financial statements (Burgstahler and
Dichev, 1997). Investments in the firms’ securities are most often based on the
financial position and performance of the firm as reflected in financial statements.
This may incentivize managers to manage the reported earnings, creating a
favorable image of the company. Healy and Wahlen (1999) define earnings
management as managers intentionally altering reported earnings with the intent of
affecting stakeholders’ view of the financial position and/or performance of the
firm.