This paper derives a linear compensation contract for managers linked to accounting earnings and stock prices using a noisy rational expectations model, and considers the possibility that earnings may be managed due to the manager's private information. The main results of this paper are as follows. Under the assumption that the manager and shareholders each maximize their own interests and that investors' prior conjectures in the stock market are self-fulfilled in equilibrium, the manager fully reflects all of his or her private information in earnings management. Moreover, the informativeness of these managed accounting earnings fully reflects the manager's private information and all public information, thereby having the effect of making the stock market more efficient. When shareholders' prior expectations of the manager's earnings management are zero, the stock price's response to accounting earnings appears as if investors have functional fixation on accounting earnings.