Abstract: The purpose of this study is to verify whether firms manage earnings using discretionary accruals differently before financing in accordance with the choice of financing between bank loans and corporate bonds. Samples of this study are the firms listed in the Korea Exchange between 1993 and 2014. Discretionary accruals as proxy of earnings management are measured using Modified Jones Model and Performance Matched Model. The analysis compared the balances of corporate bonds and bank loans along with comparative analysis of changes in amount of bonds and loans. The results of all analysis show that the firms that use a lot of bonds adjust earnings upwardly significantly more than the firms that use bank loans before financing.