Journal of Advances in Developmental Research

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Earnings Management and Its Implications on Investor Trust in Indian Markets

Author(s) Dr. Arun Kumar Jain
Country India
Abstract This research paper explores the concept of earnings management and its implications for investor trust in Indian financial markets. Earnings management, defined as the manipulation of financial statements to present a desired image of a company's performance, can significantly erode investor confidence, leading to market instability. The paper examines various techniques of earnings management employed by Indian companies and analyzes their impact on investor trust and overall market stability. It highlights the role of regulatory measures, such as the implementation of International Financial Reporting Standards (IFRS) and the enforcement of corporate governance practices by bodies like SEBI, in mitigating these practices. Despite these efforts, the research identifies challenges in fully curbing earnings manipulation, particularly during politically sensitive periods. The study further reveals that trust, a critical factor in investment decisions, is often compromised when financial reports do not reflect the true economic situation of companies, resulting in decreased market participation and increased volatility. The paper concludes by discussing the need for more stringent regulations and improved transparency to restore investor trust and ensure the long-term stability of financial markets in India.
Keywords Earnings Management, Investor Trust, Indian Financial Markets, Market Stability, Corporate Governance, IFRS, Regulatory Measures, Stock Price Volatility, Financial Transparency, SEBI
Published In Volume 9, Issue 1, January-June 2018
Published On 2018-05-03
Cite This Earnings Management and Its Implications on Investor Trust in Indian Markets - Dr. Arun Kumar Jain - IJAIDR Volume 9, Issue 1, January-June 2018.

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