Abstract
This study examines whether large- or small-sized companies are more likely to manage earnings. It is observed that firm size plays differing roles in earnings management: Large- and medium-sized firms exhibit more aggressive earnings management to avoid reporting earnings decreases than small-sized firms. In contrast, small-sized firms engage in more earnings management to avoid reporting losses than large- or medium-sized firms. The findings provide further insight into the analyses of Degeorge et al. (1999) regarding how behavioral earnings thresholds induce specific types of earnings management when firm size is considered. [PUBLICATION ABSTRACT]