Determinats of Earnings Management : A Study of Selected Indian FMCG (Fast Moving Consumer Goods) Companies

The objective of this paper is to determine Earnings management in the context of the Indian FMCG ( Fast moving consumer goods ) companies. For the calculation of earnings management Modified Jones model’s Balance sheet approach and DeAngelo model was applied. The data was collected from 5 companies of FMCG sector of India for the study. In the study earnings management was used as dependent variable and cash flow volatility ,financial leverage, tangible assets, firm size, total sales, market to book value of equity ratio were used as independent variable. Results showed that as per Modified Jones model there is a significant positive relationship between earnings management and cash flow volatility, tangible assets, while financial leverage, market value to book value of equity ratio, firm size, total sales negatively related to earnings management. As per DeAngelo model there is a significant positive relationship between earnings management and cash flow volatility, firm size, total sales tangible assets while financial leverage, market value to book value of equity ratio negatively related to earnings management