In 1983, Allied Irish Banks plc (AIB) acquired the Insurance Corporation of Ireland (ICI). Shortly afterwards, ICI got into difficulty and sought a substantial injection of funds, which AIB was not in a position to provide. ICI was effectively bankrupt, and in March 1985 the Irish Government agreed to purchase the ailing subsidiary for a nominal sum. The Government's intervention was perceived as preventing a financial crisis in the entire banking sector. Analysis of AIB's accounting treatment provides evidence of a classic case of earnings management. In both 1986 and 1992, AIB failed to provide for the full cost of support arrangements provided to the Government and Central Bank, after the State's purchase of ICI. Following a change in accounting policy, these costs were recognised in full in AIB's financial statements for the year ended 31 December 1993. This change of policy coincided with the settlement of a legal claim with the auditors of ICI. The bank's dividend policy is identified as a key driver of its earnings management strategy, as is the pressure that may have been exerted by AIB's large institutional shareholders.