One of the heated discussions on foreign direct investment (FDI) is the agency problem between managers and stakeholders. Lee and Kwok (1988) argue that legal differences, multicounty financial statements, and multicounty auditors make it difficult to monitor managers in international markets. Choi et al. (2016) report that the extent of institutional dissimilarity between institutions in home and host countries worsens monitor function of stakeholders. In addition, Singhal and Zhu (2013) argue that managers may be willing to make potentially value-destroying diversification decisions to derive and preserve private benefits such as enhanced status, high perquisites, future employment prospects, and reduced employment risk. Weak monitor function in FDI firms provides more opportunities for managers to pursue personal interests, which consequently increases agency costs. Therefore, the present study argues that managers in FDI firms may use accounting maneuvers to mislead stakeholders and lower accounting information quality in the pursuit of personal benefits such as a better compensation contracts (Healy, 1985) or improved job security (DeAngelo, 1988). Using earnings management, which is frequently applied as a measure of information quality (An et al., 2016), this study predicts earnings manipulation increases with foreign investment by FDI firms.