Evaluating Earnings Management Through Kantian Deontological Ethics: A Moral Perspective on Financial Reporting Integrity

Abstract

This study examines earnings management practices from the perspective of Immanuel Kant’s moral philosophy. While earnings management has been widely studied in the accounting literature, most research focuses on economic incentives and financial consequences rather than ethical evaluations. This study addresses this gap by applying Kantian deontological ethics to evaluate the moral legitimacy of earnings management practices. The study employs a qualitative approach using a systematic literature review of Immanuel Kant’s philosophical works and relevant literature on accounting ethics and earnings management. Relevant literature was identified through academic databases, including Scopus, Google Scholar, and ScienceDirect, using keywords related to earnings management, business ethics, and Kantian philosophy. The findings indicate that earnings management often exists in ethically ambiguous areas due to managerial incentives, pressure to achieve performance targets, and flexibility in accounting standards. From a Kantian perspective, earnings management practices that intentionally manipulate financial information violate moral duty and the principle of treating individuals as ends rather than mere means. Such practices fail to satisfy the categorical imperative because they cannot be universally applied without undermining the credibility of financial reporting systems. This study contributes to the accounting ethics literature by integrating Kant’s deontological moral theory as a normative framework for evaluating earnings management practices. The findings highlight the importance of ethical awareness in financial reporting and encourage companies and regulators to develop financial reporting policies grounded not only in technical compliance but also in moral responsibility