We investigate earnings management in unlisted firms across four emerging Eastern European countries: Poland, Hungary, Slovakia and the Czech Republic between 2003-2009. We are interested in determining whether earnings management is being practiced in emerging countries. The question arises as these countries increasingly have more importance in the European market, and till now have been barely explored. Specifically, we investigate whether companies from these emerging countries manage their earnings and whether they do it to increase or decrease the earnings figure. We also analyze whether the manipulation varies in time affected by different events, and cross-sectional analysis between the countries in the sample. Based on discretionary accruals during the period from 2003 to 2009, the results show that an average firm from emerging Eastern European countries manages earnings downwards. Results suggest that the manipulation varies over the years: a decrease in earnings management between 2003 and 2007, and increase in earnings manipulation between 2008 and 2009. We also confirm that there is a significant difference in earnings management between the emerging countries analyzed. Examining earnings management behaviour in new emerging economies may help to understand how managers cope with the pressure in highly competitive European markets. It opens new discussions and debates on the comparison of both European markets, and on the possible investigations of reasons of such manipulation
