| Abstract [eng] |
Earnings management is a highly topical area which has been researched for several decades. Academic literature identifies and extensively researches methods of analyzing and managing, optimizing and seeking for income. Hence it is possible to claim that earnings is not only the objective but also a marker whose analysis can help establish the efficiency of the activity of an enterprise as well as the strengths and weaknesses of its activity. Earnings management is a pre-considered process. Consequently, a specifically selected combination of the principles of the accounting system in an enterprise helps the leaders of a company to direct the earnings properly. The object of this academic work is earnings management in an enterprise. The aim of the paper is to define theoretical opportunities of the selection of the accounting policy in order to manage the earnings of an enterprise and to shape the cardinal details of earnings management in small and medium-sized enterprises of Lithuania, after having explored the aspects of foreign research concerning earnings management. In order to achieve the aim, the following objectives are set: (I) to analyze the explications of earnings management in the field of finance accounting theory; (II) to research the options of accounting policy contributing to the increase or decrease of the income of an enterprise; (III) to establish opportunities of earnings management in Lithuania by analyzing the standards of business accounting; (IV) to investigate the practice of earnings management in Lithuanian enterprises and to specify the core features of earnings management in small and medium-sized enterprises. The main research methods are systemic analysis and synthesis of academic research, theoretical and empirical analysis. Qualitative analysis of the data was performed with methods of mathematical statistics based on statistical frequency. After performing analysis of academic literature on accounting, it was established that the positive accounting theory dealing with the factors of the selection of accounting policy in an enterprise influenced the development of earnings management explanation, research and forecasting while earnings management researches are usually based on the three main positive accounting theories hypotheses: the bonus plan, debts/equity and political cost hipothesis. The paper concisely deals with all the types of accounting manipulations; however, major attention is paid to profit management (in a narrower sense); the fundamental earnings management motives as described in literature are singled out and analyzed. After having explored Lithuanian and foreign literature on earnings management, analytical research of business accounting standards was performed with the objective of singling out possibilities of earnings management in Lithuania. The completed research established background methods and ways of accounting policy which may influence the income of an enterprise. On the basis results of the research, a questionnaire was drawn which allowed to explore the practice of earnings management in small and medium-sized enterprises of Lithuania. After exploring the data, it was established enterprises of Lithuania are inclined to opt for income increasing accounting policies, and the key decisive factor is the taxation system of Lithuania which is not favourable to the application of income decreasing accounting policy. After performing correlation analysis of the data, very weak and statistically unreliable dependence between the marker of the financial leverage and income increasing accounting methods was discovered. After performing correlation analysis between the company’s size and income increasing accounting methods, only in two cases medium strength statistically reliable dependence was established. In other cases, statistically unreliable correlation was discovered. Consequently, the hypotheses H1 and H2 were rejected. |
