We address the informational and strategic impacts of real earnings man-
agement (REM) in a two-period oligopoly model with one-sided information.
For the strategic impacts of REM, once the demand falls short of expectation,
a rm should raise the price instead of cutting it to reach the earnings target.
For the informational impacts, to maintain opponents' uncertainty, the pri-
vately informed rm could conceal its identity by taking a mixed strategy and
setting the rst period price to be higher than in the separating equilibrium.
Finally, the presence of tunnelling from cross-shareholding rm will enhance
the price cut in the second period.