Earning management may be defined as "reasonable and legal management decision making and reporting intended to achieve stable predictable financial results." Earnings management is related to the importance of earnings amount for the investors' decision making. Earning management is not to be confused with illegal activities to manipulate financial statements and report results that do not reflect economic reality. These types of activities, popularity known as "cooking the books," involve misrepresenting financial results ("What is Earnings Management,"n.d). Real Earning Management [REM] is the deviation of ordinary business operation practices inorder to make at least some stakeholders believe that financial reporting goals have been met through the normal activities of business (Roychowdhury, 2006, P.337). These departures do not necessarily contribute to firm value even though they enable managers to meet reporting goals. Despite the fact that both real earnings management and accruals earnings management can be used to alter earnings and other important metrics, the use of REM also can significantly alter a company's actual operating activities, business strategies, and cash flows. But the concepts or the practical circumstance have been change in favor of the REM activities since it appears to be less likely than accrual earnings management [AEM] to draw auditor and regulatory scrutiny, conceivably making it an attractive alternative to AEM for the management.Reviewing the real earnings management in broad sense, Roychowdhury (2006) found that financial executives are willing to manipulate real activities to meet targets, even though the manipulation potentially reduces firm value. Real activities manipulation can reduce firm value because actions taken in the current period to increase earnings can have a negative effect on cash flows in future periods. For example, aggressive price discounts to increase sales volumes and meet some short-term earnings target can lead customers to expect such