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This paper aims to examine the extent to which real earnings management (REM) is used in Jordan to meet zero or previous year's earnings, and how this impacts the subsequent operating performance of Jordanian firms.

The study used a sample of 98 Jordanian listed firms over the 2010–2018 period. To test the research hypotheses, which are formulated in accordance with both, agency theory and signalling theory, multivariate regression is performed using a pooled OLS estimation. Additionally, a two-step dynamic generalised method of moment (GMM) model has been estimated to address any concerns regarding the potential occurrence of endogeneity issues.

The results show that Jordanian firms that meet zero or last year's earnings tend to exhibit evidence of real activities manipulations. More specifically, suspect firms show unusually low abnormal discretionary expenses and unusually high abnormal production costs. Further, consistent with the signalling earnings management argument, the authors find that abnormal real-based activities intended to meet zero earnings or previous year's earnings potentially improve the subsequent operating performance of Jordanian firms. This implies that REM is not totally opportunistic, but it can be used to enhance the subsequent operating performance of Jordanian firms. Our findings are robust to alternative proxies and endogeneity concerns.

The findings have several implications for policymakers, regulators, audit professionals and investors in their attempts to constrain REM practices to enhance financial reporting quality in Jordan. Managing earnings by reducing discretionary expenses appeared to be the most convenient way to manipulate earnings in Jordan. It provides flexibility in terms of time and the amount of spending. The empirical evidence, therefore, reiterates the crucial necessity to refocus the efforts of internal and external auditors on limiting this type of manipulation to reduce the occurrence of REM activities and enhance the subsequent operating performance of listed firms in Jordan. Drawing on Al-Haddad and Whittington (2019), the evidence also urges regulators and standards setters to develop a more effective enforcement mechanism for corporate governance provisions in Jordan to minimise the likelihood of REM incidence.

This study contributes to the body of the accounting literature by providing the first empirical evidence in the Middle East region overall on the use of REM to meet zero or previous year earnings by Jordanian firms. Moreover, the study is the first to empirically examine the relationship between REM and Jordanian firms' future operating performance.

This paper aims to examine the impact of board gender diversity on the likelihood of financial distress in 90 Jordanian companies listed on the Amman Stock Exchange from 2010 to 2021.

To examine the hypotheses, this study used the panel logistic regression. In addition, this study used the two-staged Heckman regression model as a robust check. To proxy for the financial distress, the 2005 version of Altman’s Z-score for emerging markets was used.

The results indicate that female directors can reduce the likelihood of financial distress in Jordanian listed companies. These findings align with previous literature that highlights the benefits of female directors on corporate boards.

To the best of the authors’ knowledge, this study is the first to examine the impact of board gender diversity on financial distress in Jordan and the Middle East and highlights several practical implications. It emphasizes the need for policymakers to develop regulations that promote gender diversity on corporate boards as a strategy to enhance stability and prevent financial distress. For corporate managers, incorporating more women into board roles could strengthen decision-making and risk management. Regulators are advised to support these changes through improved governance codes. In addition, increasing female board participation could enhance corporate responsibility, reduce bankruptcy risks and boost overall economic stability, benefiting society at large.

This study aims to examine the potential influence of multiple directorships (MDs) on the firm value of listed firms in Jordan.

Using a sample of 1,067 firm-year observations of Jordanian listed companies from 2010 to 2020, this study applies a pooled ordinary least squares regression model to examine the above-stated relationship. This technique was supported by conducting a generalized method of moments estimation to address the possible occurrence of endogeneity concerns.

The results show a significant negative relationship between MDs and firm performance, thereby supporting the “Busyness Hypothesis”, which suggests that directors with MDs are expected to be over-committed, too busy and less vigilant. Thus, their ability to effectively monitor the company management on behalf of the shareholders is quite limited.

To the best of the authors’ knowledge, this is the first study in Jordan, and one of the very rare studies in the Middle Eastern and North African region, to examine the relationship between MDs and firm performance. This study provides important policy and practitioner implications in the field of corporate governance by highlighting the necessity of imposing stricter limits on the number of directorships allowed for board directors. Crucially, the empirical evidence implies that limited directorships ensure that directors are able to fulfil their board responsibilities appropriately, which is significantly associated with the firm value.

The purpose of this paper is to examine the relationship between earnings management (EM) and corporate social responsibility (CSR) in Saudi Arabia. It is one of only a small number of studies to examine this relationship outside the US market, and the first in the Middle East and Arab region, particularly in Saudi Arabia.

The paper uses content analysis to extract the CSR disclosure items from annual reports of Saudi firms. A CSR disclosure index was then constructed. For EM, the residuals from Kothari et al.’s (2005) model are considered. Multivariate analysis was performed using pooled OLS-regression models to examine the direct relationship between EM and the CSR index.

Using panel data from all Saudi public firms listed on the Saudi Stock Exchange (Tadawul) over the 2015-2016 period, the authors find that CSR is positively and significantly related to EM practices as proxied by discretionary accruals. This implies that Saudi firms undertaking CSR actions are more likely to manipulate their earnings.

The findings of this paper have important policy implications for policy-makers, regulators, auditors and investors in their attempts to constrain EM practices and enhance the quality of financial reporting in Saudi Arabia.

This paper contributes to the body of accounting literature by providing the first empirical evidence in the Middle East and Arab region on the positive association between EM and CSR in Saudi Arabia.

This study examines the potential impact of capital structure on the financial performance of family-owned firms in Jordan.

Using panel data of 107 listed companies from 2019 to 2021, the authors use a multivariate regression model to empirically examine the role that family firms' capital structure can play in engendering financial performance in the short and long terms.

This study's evidence indicates that family businesses rely on equity as their primary source of funding. This approach has been proven to be detrimental to their financial performance, as evidenced by the negative impact of capital structure on family firms' financial performance in the current study.

Capital structure-related decisions are essential to a firm's performance. Thus, there have been numerous empirical studies examining the relationship between capital structure and corporate performance in various settings worldwide. However, the findings of these studies are inconclusive. Also, there are relatively few empirical studies investigating the association between capital structure and the performance of family firms in emerging countries, particularly Jordan. This study, therefore, addresses this empirical gap in extant literature.

This study aims to inspect the impact of earnings quality on corporate cash holdings of Jordanian companies listed on the Amman Stock Exchange.

This study examines a large sample of (98) Jordanian companies listed on the Amman Stock Exchange during the period that ranges from 2009 to 2019. Earnings quality was computed using two different methods; firstly, through the absolute abnormal discretionary accruals (as an inverse measure of earnings quality), which were estimated using the Dechow et al.’s (1995) cross-sectional version of the Modified Jones model and the Kothari et al. (2005) model; and secondly, through earnings persistence as a direct measure of earnings quality.

The empirical results of this study reveal that poor accounting quality (high levels of abnormal discretionary accruals) is associated with higher levels of cash holdings, implying that as the quality of earnings decreases, the harmful effects of information asymmetry and adverse selection costs will increase, leading, therefore, Jordanian companies to increase their corporate cash holdings levels to act as a buffer against any cash shortages. Further, the authors document that higher accounting quality (more persistent earnings) is associated with lower levels of cash holdings. In addition, this study found that earnings quality negatively and significantly affects the cash holdings of profitable companies in Jordan. Thus, earnings quality appeared to be a significant determinant of cash holdings for profit-making companies but not for companies enduring losses.

This study contributes to the limited evidence that investigates the relationship between earnings quality and corporate cash holdings. Where the majority of previous studies have focused on developed economies, to the best of the authors’ knowledge, this study is the first in Jordan to comprehensively explore the relationship between earnings quality, computed by the absolute abnormal discretionary accruals and earnings persistence, and corporate cash holdings. Also, it is the first to explore the nature of the earnings quality-cash holding nexus in loss-making companies compared with their profit-making counterparts to the best of the authors’ knowledge. The results of this study have important policy implications for managers, creditors, investors and academics in Jordan and other emerging economies that share similar characteristics.

This paper aims to examine the impact of board characteristics on earnings management (EM) among UK non-financial firms.

Using a sample of the UK Financial Times Stock Exchange 350 firms from 2010 till 2019, the authors investigated the relationship between board characteristics (board size, board gender diversity, board tenure, board independence, chief executive office-duality and board meetings) and EM by using the quantile regression technique.

This study found a non-linear association between board characteristics and discretionary accrual. The empirical evidence showed that board mechanisms reduce the extent of earnings manipulation among UK firms with higher discretionary accruals (DACC) than firms with low and medium DACC levels.

The results will benefit UK firms by helping them to rethink their board composition. It will also help policymakers understand how the corporate board can help ensure the quality of financial reports.

This study used the quantile regression approach, which helps to clarify the mixed findings of prior studies that used conventional regression techniques.

This paper aims to investigate the impact of corporate governance on financial reporting quality (FRQ) in Pakistan and the UK.

In this paper, three accrual-based models are used to analyse FRQ for a sample of 1,550 firm-year observations, including 78 Pakistani firms and 77 UK firms, for the period 2009–2018.

The analysis shows that board size has a negative impact on FRQ while foreign ownership has a positive impact for Pakistani and UK firms. It also shows that board independence has a positive impact on FRQ of Pakistani firms, while board meetings frequency and audit committee independence have a negative impact. We make no such observation for UK firms. In addition, the analysis shows that board gender diversity and ownership concentration negatively affect FRQ of UK firms. This study makes no such observation for Pakistani firms.

Due to the study’s focus on Pakistani and UK firms, the findings may not be generalizable to other developed and emerging economies.

The findings provide valuable insight to policymakers, regulators and investors by suggesting that the impact of board composition on FRQ of both Pakistani and UK firms is weak. The findings suggest that board size and foreign ownership are the attributes that require regulatory focus to increase FRQ. The negative impact of audit committee independence on FRQ induces rethinking among the policymakers in Pakistan and calls for fully independent audit committees.

To the best of the authors’ knowledge, this is the first research endeavour to compare the context of a developed and an emerging economy regarding the impact of corporate governance on FRQ. It also contributes to the governance literature by using three measures of FRQ and a comprehensive set of corporate governance attributes.