In terms of earnings management, this study investigates two effects of managerial ownership - interest alignment effect and management entrenchment effect- and examines how market competition affects the association between managerial ownership and discretionary accruals relating to earnings management. The results are following; Firstly, I show the U-shaped curve depicting a quadratic relationship between managerial ownership and the magnitude of discretionary accruals, and find that the inflection point is 31.08%. The interest alignment effect dominates on the range of managerial ownership below the inflection point and management entrenchment effect dominates on the range above the point. Secondly, I find that market competition have negative and positive effects on the relationship. As the negative side, market competition lowers up to 21.08% of the inflection point that the alignment effect turns to entrenchment effect. The range above 41.06% of managerial ownership sharply aggravates entrenchment effect. These negative effects of market competition are regarded that managers with considerable ownership neglect both shareholders' interests and market surveillance. As positive effects, although the inflection point is low, the magnitude of discretionary accruals in the range from 21.08% to 41.06% still stays low level. Managerial ownership on the lower range strengthens the interest alignment effect. It is understandable that the monitoring effects of both shareholders and market exist in the certain range of ownership. According to the level of managerial ownership, market competition as external pressure on manager affects earnings management negatively or positively. Therefore, these results imply that the legalization or introduction of tools that managers would be easy to protect management right are needed to be considered the status quo such as ownership structure and market surveillance.