In general, earnings management can be
interpreted as an effort managers to intervene or influence the information in
the financial statements with the purpose to deceive the stakeholder that wants
to know the performance and condition of the company. The
term intervention and deceive were used to the basis that earnings management
is an act of cheating. On the other hand the earnings
management is not an act of cheating, because these activities are still using
accounting methods and procedures generally accepted and recognized.
In agency theory explained that the difference in interest
between the stakeholder and the manager of the company. The stakeholder
will demand managers to work harder to maximize the value of the company.
On
the other hand managers make serious effort to maximize the value of the
company will be an opportunity for managers to behave opportunistically to increase
the prosperity of himself.
Financial statements is the media of important information for
the stakeholder, on the other hand is used by managers to perform earnings
management. For example, if the manager wants
the company's performance look good then the managers can raise the earnings
information is higher than actual earnings. In
addition, the order performance of the company looks be spread evenly then the
manager will organize information in ways that are the corporate profits not
going fluctuate during some periods.
On the basis of these thoughts earnings management activities
can give negative impacts, the example are as the owner does not get real
income, prospective investors are wrong in investing, lender wrong in giving
loans, and as regulatory authorities were mistaken in appraising the health of
the company so it will make policies that are not appropriate.
In managing a company's managers must behave honestly and
morally to perform its obligations. If you
want to get more material values or appreciation of the stakeholder then the
manager can do other things such as increase sales, minimize production costs,
expand market share, increase the quality of products or services.
With
it not only the managers that will increase welfare, but the stakeholder also
will feel safe because companies achieve maximum value and its business
directness is assured.
Reference:
Sulistyanto, H. Sri. ,
2008. MANAJEMEN LABA: Teori dan Model Empiris. Jakarta :
PT Gramedia Widiasarana Indonesia.
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