The impact of corporate governance mechanisms on real and accrual earnings management practices: evidence from Jordan
By Lara Al-Haddad, Mark R. Whittington. Corporate Governance : The international journal of business in society, 2019
115 citations recorded by the source corpus.
Purpose This paper aims to investigate the impact of corporate governance (CG) mechanisms on real (REM), accrual-based earnings management (AEM) and REM/AEM interaction in Jordan following the 2009 Jordanian CG Code (JCGC). Design/methodology/approach The study used a sample of 108 Jordanian public firms covering 2010-2014. Hypotheses are tested using pooled OLS-regression models. Findings The authors find that both institutional and managerial ownership constrain the use of REM and AEM. In contrast, both independent directors and large shareholders are found to exaggerate such practices, and CEO-duality is found to exaggerate REM only. However, foreign ownership does not appear to have a significant impact. They further find that managers use REM and AEM jointly to obtain the greatest earnings impact. Practical implications The findings have important implications for policymakers, regulators, audit professionals and investors in their attempts to constrain earnings management (EM) practices and improve financial reporting quality in Jordan. Originality/value The authors believe this to be the first Jordanian study examining the relationship between CG mechanisms and both REM and AEM following the introduction of the 2009 JCGC, as well as the first in Jordan and the Middle East to examine board characteristics and REM. Moreover, it is the first to test for the potential substitution of REM and AEM since the 2009 JCGC enactment. As such, the findings draw attention to EM practices and the role of monitoring mechanisms in Jordan.
Subfields: Accounting, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/758a2e6a0567302b0a97015766ba81997db67580
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Accounting
In Strategy and Management
Citations in the corpus
- Factors affecting corporate environmental disclosure in emerging markets: The role of corporate governance structures (2020, methodology): “6 their sustainability performance to reduce the information asymmetry issue (Al-Haddad and Whittington, 2019).”