The objective of this research is to examine the effect of earnings management on fraud, which eventually influence the  probability of financial distress. Hypothesis testing is conducted by using logistic regression method using the sample of listed companies in Indonesia Stock Exchange (BEI) from 2009 to 2013. The sample of fraudulent companies are based on the sanction decision of Financial Service Authorities  in 2009 to 2013. The result of this study shows that earnings management increases the probability of fraud action. However, this study does not find that the increase in probability of fraud  will increase the probability of financial distress.