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The Influence of Leverage and Profitability on Earnings Quality: Jordanian Case

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  • Lina Hani Warrad

Abstract

The fundamental target of financial accounting is to provide information helpful to investors in making forecasting about firms performance. The evolution of income reporting as the essential source for investor decision making has been well authenticated and income reporting helps economic society in a different ways. (Schroeder, et al., 2014) The present study aims to survey the influence of leverage measured by debt ratio separately on Earnings Quality, and the influence of profitability measured by return on asset (ROA) separately on Earnings Quality, and finally the influence of leverage and profitability together on Earnings Quality. The paper covered the period from 2011 to 2015, and employed some statistical techniques on all listed Islamic Banks at Amman Stock Exchange (ASE) to revealed that there is a significant influence of debt ratio on the listed Jordanian Industrial companies’ Earnings Quality, and there is a significant influence of return on asset (ROA) on the listed Jordanian Industrial companies’ Earnings Quality, Finally, there is a significant influence of leverage and profitability on the listed Jordanian Industrial companies’ Earnings Quality.

Suggested Citation

  • Lina Hani Warrad, 2017. "The Influence of Leverage and Profitability on Earnings Quality: Jordanian Case," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(10), pages 62-81, October.
    • Handle: RePEc:hur:ijarbs:v:7:y:2017:i:10:p:62-81
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    References listed on IDEAS

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    1. Ball, Ray & Shivakumar, Lakshmanan, 2005. "Earnings quality in UK private firms: comparative loss recognition timeliness," Journal of Accounting and Economics, Elsevier, vol. 39(1), pages 83-128, February.
    2. Bartov, Eli & Gul, Ferdinand A. & Tsui, J.S.L.Judy S. L., 2000. "Discretionary-accruals models and audit qualifications," Journal of Accounting and Economics, Elsevier, vol. 30(3), pages 421-452, December.
    3. Cristina Gaio & Clara Raposo, 2011. "Earnings quality and firm valuation: international evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 51(2), pages 467-499, June.
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