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Does The Presence Of Independent Directors Reduce The Practices Of Earnings Management? The Moderating Role Of Family Ownership Concentration

Author

Listed:
  • Dea Al-Deen Al-Sraheen

    (Faculty of Business, Al-Zaytoonah University of Jordan, Jordan)

  • Khaldoon Ahmad Al Daoud

    (Faculty of Economics and Administrative Sciences, Yarmouk University, Jordan)

Abstract

While often criticized, the independence of directors remains a crucial criterion for evaluating the effectiveness of the monitoring role of boards. This study examines the relationship between board independence and earnings management, paying attention to moderation role of family ownership concentration on this relationship using a sample of services companies listed on Amman Stock Exchange ASE. This study documented a significant and negative association between board independence and earnings management. In addition, the moderating role of family ownership concentration on this relationship was also negative. Thus, the board’s monitoring function was inefficient due to the concentration of ownership. These results were obtained through using multiple and sequential regression analysis for the research data from 2013 to 2016. This study provides new ideas for future research such as examining the impacts of the migration of capitals and investors from neighbouring countries such as Syria and Iraq.

Suggested Citation

  • Dea Al-Deen Al-Sraheen & Khaldoon Ahmad Al Daoud, 2018. "Does The Presence Of Independent Directors Reduce The Practices Of Earnings Management? The Moderating Role Of Family Ownership Concentration," Ekonomski pregled, Hrvatsko društvo ekonomista (Croatian Society of Economists), vol. 69(6), pages 638-654.
    • Handle: RePEc:hde:epregl:v:69:y:2018:i:6:p:638-654
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    More about this item

    Keywords

    board independence; family ownership; earnings management; Amman Stock Exchange;
    All these keywords.

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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