Earnings management: Reconciling the views of accounting academics, practitioners, and regulators

This paper addresses the fact that accounting academics often have very different perceptions of earnings management than do practitioners and regulators. Practitioners and regulators often see earnings management as pervasive and problematic - and in need of immediate remedial action. Academics are more sanguine, unwilling to believe that earnings management is actively practiced by most firms or that the earnings management that does not exist should necessarily concern investors. The paper explores the reasons for these different perceptions, and argues that each of these groups may benefit from some rethinking of their views about earnings management.