||Earnings management may be defined as reasonable and legal management decision making and reporting intended to achieve stable and predictable financial results. Earning s management is not to be confused with illegal activities to manipulate financial statements and report results that do not reflect economic reality. These typed of activities, popularly known as cooking the books. Involve misrepresenting financial results.Many executives face a lot of pressure to cross the line from earnings management to cooking the books. A 1998 survey at a conference sponsored by CFO. Magazine found that 78 percent of the chief financial officer (CFOs) in attendance had been asked to cast financial results in a better light, though still using generally accepted accounting principles (GAAP). The purpose of this course is to study the research on earning management.