Complexity, Clarity, and Earnings Management: The Impact of Financial Report Obfuscation on Investor Perception and Stock Valuation

Permana ; Ngadi ; Qalbia ; Farah ; Kusnanto ; Eri
International Journal of Management, Accounting &... 📅 2025 Vol 2, No 2 🔗 DOI: 10.70142/kbijmaf.v2i2.289
Abstract
This qualitative literature review explores the relationship between financial report obfuscation, complexity, transparency, and earnings management, focusing on how these factors influence investor perception and stock valuation. The review examines the strategic manipulation of financial reports by managers, specifically through obfuscation techniques that distort financial transparency. Obfuscation, by disaggregating financial data into numerous line items, can exacerbate biases in reported profitability, leading investors to extrapolate distorted valuations. This paper reviews the interplay between complexity and transparency in financial reporting and its implications for earnings management. It highlights the challenges investors face in interpreting complex financial reports, leading to potential misvaluation of firms. The review also considers how various factors, such as investor sophistication and managerial honesty, affect the degree of obfuscation and earnings management.
Keywords
financial report obfuscation; earnings management; investor perception; stock valuation; financial transparency
How to Cite

Permana, et al. (2025). Complexity, Clarity, and Earnings Management: The Impact of Financial Report Obfuscation on Investor Perception and Stock Valuation. International Journal of Management, Accounting & Finance (KBIJMAF), 2(2). https://doi.org/10.70142/kbijmaf.v2i2.289

Permana, Ngadi ; Qalbia, Farah; Kusnanto, Eri, "Complexity, Clarity, and Earnings Management: The Impact of Financial Report Obfuscation on Investor Perception and Stock Valuation," International Journal of Management, Accounting & Finance (KBIJMAF), vol. 2, no. 2, 2025.

Permana, Ngadi ; Qalbia, Farah; Kusnanto, Eri. "Complexity, Clarity, and Earnings Management: The Impact of Financial Report Obfuscation on Investor Perception and Stock Valuation." International Journal of Management, Accounting & Finance (KBIJMAF), vol. 2, no. 2, 2025.

Permana, Ngadi ; Qalbia, Farah; Kusnanto, Eri. "Complexity, Clarity, and Earnings Management: The Impact of Financial Report Obfuscation on Investor Perception and Stock Valuation." International Journal of Management, Accounting & Finance (KBIJMAF) 2, no. 2 (2025).

Permana, et al. (2025) 'Complexity, Clarity, and Earnings Management: The Impact of Financial Report Obfuscation on Investor Perception and Stock Valuation', International Journal of Management, Accounting & Finance (KBIJMAF), 2(2). doi: 10.70142/kbijmaf.v2i2.289.

Permana, Ngadi ; Qalbia, Farah; Kusnanto, Eri. Complexity, Clarity, and Earnings Management: The Impact of Financial Report Obfuscation on Investor Perception and Stock Valuation. International Journal of Management, Accounting & Finance (KBIJMAF). 2025;2(2).

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