This study aims at the association between earnings management and firm value. Previous studies verified earnings management affected firm value; the study is of the opinion that the level of firm value is most likely one of the consideration factors of earnings management for management. Therefore, by means of simultaneous equation models, the study examines the endogenous relationship between earnings management and firm value. The empirical results show that: firstly, earnings management does affect firm value. If the earnings management is positive, firm value will increase with the earnings increase; on the other hand, firm value will decrease with the earnings decline. Secondly, the level of firm value also will affect earnings management. The results demonstrate that the higher firm value, the more likely positive earnings management; the lower firm value, the management would proceed negative earnings management.