Earnings management refers to the practice of intentionally influencing a company's financial statements to present a desired image of its financial performance. This can involve adjusting accounting methods or estimates to smooth out fluctuations in earnings, making the company appear more stable or profitable than it actually is. While some level of earnings management is legal and accepted, excessive manipulation can mislead investors and stakeholders. Regulatory bodies, like the Securities and Exchange Commission (SEC), monitor these practices to ensure transparency and protect the integrity of financial reporting.