There are three ways to manage earnings. That is accruals, real, and shifting. The
famous method to manage earnings is accruals and real. Usually, real activities
manipulation is conducted on the going of period. The action will increase the loss for
the firms at the end of period. To avoid the loss, managers will manage earnings through
accruals (discretionary accruals). Therefore, the objective of this study is to investigate
whether real activities manipulation positively influences accruals earnings management.
To investigate the issue, this study collected data from Indonesian Stock Exchange.
Samples of this study are the manufacturing companies. There are 195 firm year from
2003 to 2007. The results of this study support research hypothesis that real activities
manipulation positively influence accruals earnings management. The higher real
activities manipulation effects higher accruals earnings management at the end of period.