The Impact of Financial Performance Metrics on Earnings Management A VIKOR Method Analysis

Let me create a concise and informative abstract that captures the key aspects of this research paper. This study investigates earnings management practices through the application of the VIKOR (VIseKriterijumska Optimizacija I Kompromisno Resented) multi-criteria decision-making method. The research analyzes five key financial performance indicators: Management's Financial Performance, operating income, earnings before interest and taxes (EBIT), net income, and Adjusted Earnings, evaluating them across multiple criteria including profitability ratios, return on assets, cash flow analysis, and earnings quality. Using a comprehensive dataset and the VIKOR methodology, the study reveals that Operating income became the primary consideration in earnings management decisions, taking precedence after EBIT. and Management's Financial Performance. Notably, the research demonstrates that optimal mathematical performance doesn't necessarily correlate with practical superiority in complex financial decision-making scenarios, as evidenced by Net Income's positioning. The findings contribute to the literature by providing a structured approach to evaluating earnings management strategies in situations involving conflicting criteria, offering valuable insights for financial managers and decision-makers in developing more effective earnings management frameworks. This study emphasizes the importance of adopting a balanced, multi-criteria approach to earnings management rather than relying on individual metrics in isolation.