earticle

영어

Earnings management is a practice where managers manipulate financial statements to benefit their interests. This practice has gained attention from academics, regulators, and industry professionals. Previous models have attempted to identify earnings management activities, but they have been ineffective in real practice. This study introduces a novel approach using the Genetic Algorithm (GA), a heuristic search technique based on natural evolution. GA generates easy-to- interpret rules and can analyze large amounts of financial data, detecting patterns that might not be apparent through traditional methods. The proposed GA model outperforms other benchmark models, demonstrating better predictive accuracy. This research aims to bridge the perceptual gaps between academics and practitioners regarding earnings management and contribute to a more comprehensive understanding of this critical issue in financial reporting.