Depressing earnings management in Palestinian corporations: the role of audit quality, audit committee, and accounting conservatism

Muiz Abu Alia, Islam Abdeljawad and Mohammad Yaaqbeh

International Journal of Revenue Management, 2020, vol. 11, issue 3, 213-236

Abstract: The influence of audit quality, the existence of an audit committee, and accounting conservatism in depressing earnings management (EM) were examined in this study while controlling for board characteristics, financial leverage, and client's company size. A regression model on a sample of 184 firm-year observations of 34 companies listed on Palestine Exchange (PEX) between 2011 and 2016 was employed. Based on the results, the independent variables demonstrated negative association to discretionary accruals, measured by four modified versions of Jones model, as a proxy for EM; in other words, the variables were effective in depressing EM and consequently, in enhancing the financial statement quality. A similar negative association was also demonstrated by board size and chief executive officer (CEO) duality. Meanwhile, financial leverage and EM showed a robust positive association suggesting that Palestinian corporations employed EM mainly to influence creditors' decisions. Policy makers should consider the results presented in this study to improve regulations related to reporting and governance.

Keywords: earnings management; audit quality; accounting conservatism; audit committee; Palestine. (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.inderscience.com/link.php?id=109419 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijrevm:v:11:y:2020:i:3:p:213-236

Access Statistics for this article

More articles in International Journal of Revenue Management from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().