The profit of a company is the earnings of the company. The earnings of companies are a significant variable for understanding the economic health of the company. Investors who focus on a company stock and operations usually look at the earning variable in order to make a rational choice on the investment. The stock attractiveness is hence given by this variable. Earnings management in this context can be defined as the strategy that a company uses for the purpose of maintaining its investment attractiveness. Earnings management deliberately manipulates company earnings so as to show a preferred target for the company’s future (Louis, 2004). Income smoothing might be done to show that the company’s economic health is stable. As researchers argue, this earnings management or manipulation is a material misrepresentation. The SEC also holds that abusive earnings management will becomes punishable with penalties. There are different modes in which earning management is done, but the primary goal of earnings management is the same. It is aimed at meeting an analyst’s consensus in earning.