This study examines whether earnings management action was done in Malaysia for period of 1999. The study was based on abnormal accrual, continued by is spliting off to discretionary accrual and non-discretionary accrual by Jones' model (1991). There were 295 companies registered in Kuala Lumpur Stock Exchange which had completed financial statement for the year of 1999-2000. Statistical analysis in this study shows that there is no strove evidence that the earnive management by income maximization that was motivated by the release of income tax exemption was applied in 1999 by income amximization that was motivated motivated by the release of tax income exemption was applied in 1999. The analysis is also done for the year of 2000, as the action of earning management in 1999 will have impact for the financial reporting in the following year. Thus, in can be identified that the finding in the year of 2000 will support the finding of the previous year.