Financial distress affects how companies manage their earnings. When a company is in financial trouble, they tend to manipulate their financial reports by adjusting accruals. On the other hand, when a company is financially healthy, they are more likely to manipulate their earnings by adjusting real activities like production costs. This study looked at data from Indonesian companies between 2005 and 2014 and found that financial distress leads to an increase in real earnings management and a decrease in accruals earnings management.