Influence of Discretionary Accruals on Earnings Management Practices: A Study of Select Indian Service Sector Companies

This study analyzes the influence of discretionary accruals on earnings management practices carried out by the Indian service sector firms, viz., telecom and software. In this study, DeAngelo model has been used for calculating discretionary accruals that identifies the presence of earnings management. The sample was drawn from the listed companies of both the groups based on firms’ assets size and market capitalization for the period 2007-08 to 2011-12. An examination of the sample firms corroborates a definite presence of earnings management practices through discretionary accruals.