Abstract
Research background: The paper is oriented on influence analysis of globalization on usage of different techniques of creative accounting and its development. The concept of creativity and accounting in together has logical background. Creativity is generally perceived as a positive thing. It is a certain creativity and originality created by the individual. Among these techniques, the paper deals with earnings management and what differs it from fraudulent behavior. The first part deals with definition of earnings management and comparison of different approaches. The second part outlines the major differences and boarders between earnings management and fraud from theoretical point of view with the usage of multiple views from different authors. Third part deals with different forms of earnings management. The last part discusses motives behind the usage of earnings management by managers and impact of globalization on this decision making. Purpose of the article: To describe motives behind earnings management usage and potential new directions of these motives under the conditions of continuous internalization and globalization. Methods: The paper is built on the methods of formal logic. The most important one for the purpose of this article is descriptive method. Among others, there are analysis, graphic method, comparison and synthesis. Findings & Value added: Comprehensive overview of the earnings management definition, its forms and motives behind its usage.
Highlights
Earnings management as a concept is not new
Profit management occurs, when managers use judgments and conjectures in financial reporting in a way that allows financial results to be changed to give investors a distorted view of the company's financial situation, or to affect the output of contracts depending on the amount of the reported accounting results
It refers to earnings management as an aggressive practice used by listed companies, which involves the application of various forms of fraudulent techniques aimed at distorting a company's real financial results to achieve its own desired objectives
Summary
[2] some organizations made their own definitions like the United States Securities and Exchange Commission (SEC), in its 1999 Annual Report It refers to earnings management as an aggressive practice used by listed companies, which involves the application of various forms of fraudulent techniques aimed at distorting a company's real financial results to achieve its own desired objectives. [6] Earnings management often requires the practice of reducing and withholding profits in prosperous years, in order to take advantage of profits made in a weaker period. This popular form of profit reporting is known as income smoothing. According to him the term earnings management means the choice of accounting policy, resp. policies to business managers so that specific goals can be achieved. [7]
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