Earnings announcement affects respective firms' share prices based on their performances. Financial markets react to the bottom figure of the financial statements, which the authors believe include earnings management components. Similarly, earnings surprise also affects the market share. Therefore, they believe that there is a need for empirical analysis to understand the effects of earnings management and earnings surprises on firms' market performance. The authors use a shorter 3-day window to measure the market-adjusted returns in contrast to the existing literature because they believe that the markets are efficient and will be able to mitigate the shocks in the longer run. A shorter window excludes the likely effects of other events that could affect the returns. They use the discretionary accrual modified model and real earnings management to proxy for earnings management. Earnings management is the management's discretionary choice to manipulate earnings to achieve the financial targets. Earnings surprise is the difference between firms' reported earnings and the Wall Street estimates, which affects individual firms' stock prices around the earnings announcement and in the long run. We apply multivariate-pooled OLS heteroscedasticity-consistent standard error regressions. The study results suggest that the magnitude of earnings management has a positive and significant relationship with firms' market-adjusted return. Similarly, good news also shows a positive relationship, and a significant negative relationship exists with bad news. This indicates that the earnings announcement does indeed have significant effects on firms' market-adjusted returns.