The current study focuses on the phenomenon of earnings management in the eyes of stockholders and investors. It aims to determine the most important incentives that may encourage managers of listed firms in Amman Stock Exchange to practice the phenomenon of earnings management. Moreover, the study determines the ability of investors and stockholders to detect the practices of the phenomenon. In addition, it determines the effects of the practices of earnings management phenomenon on the stockholders' reactions. The study assumes four types of incentives; (1) contracting issues and related benefits, (2) income tax reduction, (3) increasing stock market prices, and (4) avoiding the potential pressure of labor unions. A convenient sample consists of 170 investors stockholders is selected. A questionnaire is used to gather the required necessary primary data, where 153 responses had been received back in a usable form. One sample t-test method is used to test the hypotheses of the study, at 95 Percent level of confidence. The study finds that contracting, income tax reduction, stock market price increase, and the avoidance of the labor unions' pressure, are all actual incentives to managers of firms to manage earnings. Moreover, the study finds that investors and stockholders in Amman Stock Exchange have no enough ability to detect the practices of earnings management and they tend to change their decisions when they be informed with the existence of these practices.