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This study examines the effect of firm size on corporate earnings management. Documented is empirical evidence that both large- and small-sized firms manage earnings to avoid reporting small negative earnings or small earnings decreases. However, we observe that firm size plays differing roles in earnings management. We find that small firms engage in more earnings management than large- or medium-sized firms to avoid reporting losses. On the other hand, large- and medium-sized firms exhibit more aggressive earnings management to avoid reporting earnings decreases than small-sized firms