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Accounts manipulation has been the subject of research, discussion and even controversy in several countries including the USA, Canada, the U.K., Australia, Finland and France. The objective of this paper is to provide a comprehensive review of the literature and propose a conceptual framework for accounts manipulation. This framework is based on the possibility of wealth transfer between the different stake‐holders, and in practice, the target of the manipulation appears generally to be the earnings per share and the debt/equity ratio. The paper also describes the different actors involved and their potential gains and losses. We review the literature on the various techniques of accounts manipulation: earnings management, income smoothing, big bath accounting, creative accounting, and window‐dressing. The various definitions of all these, the main motivations behind their application and the research methodologies used are all examined. This study reveals that all the above techniques have common elements, but there are also important differences between them.

Robert L. Bunting (2005), the newly installed chairman of the American Institute of Certified Public Accountants (AICPA), recently remarked as follows:A great profession takes a long view. Its members inherit a legacy from the past, derive benefit from it, build on it and pass it on to the next generation even stronger than they found it. A great profession occupies a position of trust. When we review our assets, none is as important as our position of trust in the economic marketplace. A great profession builds bridges of communication and credibility with key stakeholders. These include the regulators and government bodies who rely on our skills and services to advance the public interest. A great profession plays a vital role in the health of our economy and our society. And a great profession renews itself. It does so by attracting a continual flow of talented new professionals. And it renews itself by carving new roads that can accommodate the needs of future travelers.

What is the relationship between outcomes for distressed firms and the value of managerial stockholdings in those firms? The outcomes presented are: (1) Chapter 11 reorganization; (2) acquisition/merger; (3) internal turnaround Dollar value of ownership of the firm's common stock by the firm's top managers is used to distinguish between the outcomes for distressed firms which have declining performance. The likelihood of a firm ending up in a merger with or being acquired by another private firm increases with the amount of managerial wealth invested in the firm's stock. Firms whose managers are not owners are more likely to follow an internal turnaround strategy, such as cutting costs and/or selling assets. This strategy offers non‐owner managers a greater opportunity to maintain their managerial prerogatives than does a merger or an acquisition. This outcome is consistent with agency theory, which asserts that where possible, managers act in their own best interests to the detriment of the stockholders' interests. In the context of the firm, agency theory describes the situation wherein stockholders (principals) delegate responsibility for the firm's day to day affairs to managers (agents). One key issue in agency theory is risk sharing. Managers and stockholders may prefer different outcomes for the distressed firm due to their different risk preferences. Findings of the present study suggest that managerial wealth was not a predictor of Chapter 11 reorganization in bankruptcy, but the distressed firms' strategies were affected by the aggregate dollar value of a firm's stock owned by top managers.

This study examines whether non‐historic income measures disclosed by a sample of Canadian firms convey information that is relevant to the evaluation of their performance. The sample firms were partitioned into several portfolios based on two firm‐specific measures which are assumed to capture input cost increases and the firm's ability to pass these increases on to its customers via higher output prices. Several groupings of the firms were performed based on various measures of non‐historic income. In general, the results of this study provide support for an association between market returns on common stock and non‐historic income measures.

The purpose of this paper is to examine whether managerial ownership‐induced income smoothing accentuates or attenuates an information asymmetry problem. Standard agency theory suggests that managerial ownership may play a significant role in alleviating agency problems between managers and external shareholders that can arise from information asymmetry. According to this view, managerial ownership‐induced income smoothing could convey managerial private information and could, therefore, be considered as informative. However, managerial ownership could also entrench managers with absolute control of firms, and encourage them to engage in earnings manipulation, including earnings smoothing, in order to hide private benefits of control.

The paper uses two smoothing measures, and separate total smoothing into its innate and discretionary components. The former is determined by firm fundamentals, whereas discretionary smoothing allows managers the flexibility to use it for either informative or opportunistic reasons. The paper then regresses information asymmetry, as proxied by scaled bid‐ask‐spreads, on the interaction between managerial ownership and both these smoothing components.

The paper documents that managerial ownership‐induced discretionary smoothing has a positive effect on bid‐ask spreads. This result seems to support the entrenchment view of managerial ownership.

This study offers insights to policy makers interested in enhancing the effectiveness of the managerial ownership aspect of corporate governance in New Zealand.

This paper uses agency theory to provide a comparative assessment of the efficient versus the entrenchment hypotheses with respect to managerial ownership.

The present article aims to test the fairness of reported numbers by the management and examine the magnitude of earnings management in Indian corporate enterprises by testing the Beneish profit model. This paper contributes by further verifying the results of the Beneish model by applying the concept of “quality of earnings and revenue” to the sample units. Quality of reported numbers by the management has always been a concern for a common shareholder on account of the underlying proposition of earnings management. There are numerous models available to test the quality of these numbers, i.e. presence of earnings management. Most of these models are accrual based which have been subject to significant criticism due to estimate-based approach. The Beneish profit model, which combines accruals and financial ratios and/or indexes, is one such alternative to the accruals approach.

A “case-based” research approach has been followed here for analyzing Indian corporate enterprises on select basis. The Beneish profit model, developed specifically for testing earnings quality and detecting earnings management, has been used in the present study. The data analysis has been well supported by “quality measurement tools”.

An examination of the units shows the need for improvement in the quality of earnings in the sample units, and there is a presence of earnings management in them.

The present study could be confined to only top 12 profit-making corporate enterprises in the private sector in India, leaving all other enterprises due to data non-availability. Of 25 enterprises, there were public sector undertakings too which had to be excluded.

The present study was confined to only 12 profit-making corporate enterprises in the private sector due to sampling requirements; the scope of the units can be extended to other units in diverse sectors with different size and scale of operations. It would further verify the present discussion and also provide future enlightenment on the issue of earnings management.

It is an original article which explores creative accounting practices for better shareholders’ interest.

The purpose of this paper is to examine the determinants of accounting policy choices under International Accounting Standards (IASs) of listed firms in South Asia.

We selected three IASs-based accounting policy choices from 369 listed companies in India, Pakistan and Bangladesh for the financial year 2007-2008.

Our results show that firm size, investment opportunity set, leverage and ownership by the general public are significant determinants of accounting policy choice in South Asian countries. However, we do not find a significant relationship between firms’ accounting policy choices and profitability, assets-in-place and taxes.

Our results suggest that as some flexibility exists in IASB’s accounting standards, this may allow managers to use income-increasing/decreasing methods. There is scope for regulators and standards setters to reduce the alternative methods which are likely improve firms’ reporting quality.

Our study contributes to the understanding as to what determines managers’ choice of a particular accounting method allowed in IAS.

There are two problems when a principal invests capital and hires an agent to do the work. The problems relate to inducing the agent to exert the optimal effort and to effect an optimal risk sharing arrangement. This paper introduces the concepts and enumerates the fundamental solutions to this agency problem. This approach is very useful in the managerial accounting area of determining the value of accounting information for setting performance evaluation and incentive payment schemes.