Citation:

Andajani, Akhmad Riduwan. "Ethics and Corrupted Mind in Earnings Management Practice: A Hermeneutical Study" International Research Journal of Economics and Management Studies, Vol. 5, No. 8, pp. 26-36, 2026. Crossref. https://doi.org/10.56472/25835238/IRJEMS-V5I8P103

Abstract:

This study aims to explore the perceptions of accountants and business practitioners toward earnings management practices executed by managers. It is informed by prior research that demonstrates widespread earnings management within corporate financial reporting, driven by diverse motivations and interests. Employing a qualitative approachspecifically a hermeneutic lens data were gathered through in-depth interviews with an accounting educator, a management accountant, a public accountant, an investment advisor, a credit analyst, and a tax auditor. The findings provide insight that the informants hold contrasting perceptions of earnings management practices. From the perspective of the accountants and the tax auditor, earnings management cannot be viewed as earnings manipulation as long as the practice is conducted within the framework of financial accounting standards. The accountants further argue that earnings management should not be regarded as corrupt behavior, unless it occurs outside the boundaries of financial accounting standards. Conversely, from the perspective of the investment advisor and the credit analyst, earnings management executed through any pattern and strategy is a reflection of corrupt behavior driven by a corrupted mind. They contend that earnings management is invariably conducted systematically based on specific motivations and interests. Ultimately, earnings management is an unvalued practice for stakeholders; hence, it must be avoided by managers.

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Keywords:

Accrual Accounting, Earnings Management, Corrupted Mind, Hermeneutics, Qualitative Approach.