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Does the Monitoring Mechanisms Considered as Dilemma against the Practices of Earnings Management

Author

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  • Dea'a Al-Deen Omar Alsraheen
  • Isam Hamad Saleh

Abstract

This paper mainly aims to explore the role of monitoring mechanisms in limiting the earnings management practices among service firms in Jordan. The data used in this study were from the financial annual reports of 59 ASE listed service firms in 2015. The results of multiple regression analysis demonstrate the fairly varied influence of board of directors’ variables. This paper presented three hypotheses covering board independency, CEO duality and audit committee. According to the results, internal monitoring mechanisms significantly impact the level of the practices of earnings management and the reduction of the agency conflict. Additionally, the regulatory bodies in Jordan should focus more on the role of internal monitoring mechanisms in Jordanian companies in terms of effectiveness in order to improve the quality of financial reports can be improved via the assurance of high quality of earnings. Finally, this study becomes a catalyst for more research on quality of financial reports and earnings quality in Jordan and other countries where there is still lack of studies in this domain.

Suggested Citation

  • Dea'a Al-Deen Omar Alsraheen & Isam Hamad Saleh, 2017. "Does the Monitoring Mechanisms Considered as Dilemma against the Practices of Earnings Management," International Business Research, Canadian Center of Science and Education, vol. 10(10), pages 39-44, October.
    • Handle: RePEc:ibn:ibrjnl:v:10:y:2017:i:10:p:39-44
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    References listed on IDEAS

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    1. Ryan Davidson & Jenny Goodwin‐Stewart & Pamela Kent, 2005. "Internal governance structures and earnings management," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 45(2), pages 241-267, July.
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    Cited by:

    1. Deaa Al-Deen Al-Sraheen & Raneem Mohammed Saleh & Mohammad Husain Alsmadi, 2019. "Cosmetic Accounting Practices among Jordanian Firms? The Role of Ownership Concentration and Political Influence," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 17(1), pages 18-25, June.

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    More about this item

    Keywords

    earnings management; CEO duality and audit committee;

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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