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The effect of earnings management on profitability and risk : an applied study on non-financial firms listed on Amman stock exchange
Dissertant
Thesis advisor
Comitee Members
University
Arab Academy for Financial and Banking Sciences
Faculty
The Faculty of Banking and Financial Sciences
Department
Accounting Department
University Country
Jordan
Degree
Ph.D.
Degree Date
2007
English Abstract
Earnings management (EM) occurs when managers use their discretionary power in the financial reporting process and in structuring transactions.
By managing earnings over time, managers convey private information to stakeholders about the underlying economic performance of the company or attempt to influence contractual outcomes that depend on the reported accounting income assuming market efficiency.
This study aims at achieving the following objectives : examining the explanatory power of the earnings management of future profitability and risks, introducing evidence about the information content of earnings management from the Jordanian market, and enriching the literature on earnings management relationships in the capital market research.
The study sample consists of (81) industrial and service companies listed in Amman Stock Exchange (Amman Bourse), during the period (1995-2004).
Regression analysis is employed to examine the study's hypotheses (nine models).
(Adjusted-R2) was used to indicate the incremental information content for the study variables.
The study found the following :- 1.
The current profitability predicts future profitability.
2.
Earnings management has incremental information relative to current profitability when predicting future profitability.
3.
Past profitability provides incremental information related to current profitability when predicting the future profitability.
4.
Earnings management has incremental information content with respect to current and past profitability when predicting future profitability.
5.
Stock prices cannot predict future profitability.
6.
Current profitability has incremental information relative to stock prices when predicting future profitability.
7.
Earnings management has incremental information content to current profitability and stock prices when predicting future profitability.
8.
Earnings management is not associated with the level of systematic risks.
9.
Earnings management is not associated with the level of insolvency risks.
These results mean that the lagged earnings is a good predictor to the future earnings, and Jordanian companies' managers use earning management tools to manipulate profitability trend in the future to achieve a target level in earnings that deserves theirs benefits.
Main Subjects
Financial and Accounting Sciences
Topics
No. of Pages
127
Table of Contents
Table of contents.
Abstract.
Chapter one : General framework.
Chapter two : Theoretical framework.
Chapter three : Literature survey.
Chapter four : Research methodology.
Chapter five : Relationship between earnings management and future profitability.
Chapter six : Relationship between earnings management and risk.
Chapter seven : Conclusions and recommendations.
References.
American Psychological Association (APA)
Shubita, Muhamad Fawzi. (2007). The effect of earnings management on profitability and risk : an applied study on non-financial firms listed on Amman stock exchange. (Doctoral dissertations Theses and Dissertations Master). Arab Academy for Financial and Banking Sciences, Jordan
https://search.emarefa.net/detail/BIM-304879
Modern Language Association (MLA)
Shubita, Muhamad Fawzi. The effect of earnings management on profitability and risk : an applied study on non-financial firms listed on Amman stock exchange. (Doctoral dissertations Theses and Dissertations Master). Arab Academy for Financial and Banking Sciences. (2007).
https://search.emarefa.net/detail/BIM-304879
American Medical Association (AMA)
Shubita, Muhamad Fawzi. (2007). The effect of earnings management on profitability and risk : an applied study on non-financial firms listed on Amman stock exchange. (Doctoral dissertations Theses and Dissertations Master). Arab Academy for Financial and Banking Sciences, Jordan
https://search.emarefa.net/detail/BIM-304879
Language
English
Data Type
Arab Theses
Record ID
BIM-304879