The extent of practices of earnings' management by companies registered in the Qatar capital market

Abstract EN

Many studies have devoted their attention to get to know the extent of the practices of earnings management existent in various markets and This study seeks the examine of to what extent the Directors of companies registered at the Qatari capital market use the financial reports in the earnings' management, and whether or not these practices vary according to the characteristics of companies, such as the type of activity or the profile of the company or the level of earnings.

The data were collected from financial reports published for the sample of companies and then taking down the data and carrying out the statistical analysis of the data, which relied on the use of the test of Pearson correlation coefficient, hence the Correlation Matrix in order to test the above-mentioned relations between the elements of the statements of income and cash flows (at 90% confidence level).

The application of these tests on the companies data represented in the sample of the study as one group to examine to what extent there are practices of earnings' management at the corporate level.

The results point to that, we may say there is a strong likelihood of the existence of practices of earnings' management and an attempt to interfere in the figures of the income statement, particularly in its second stage, namely, the expenses and other revenues (other than the key processes and activities).

Those results are in line with the conclusion of the study conducted by Kinnunen and Koskela 2006, which focused on the management of earnings at the international level through the application on a sample of 87000 profitable numbers of 22000 companies in eighteen countries.

The Qataris' Capital Market Authority should focus on the discovery of such practices and to take deterrent measures against the companies found to have such practices, and this is considered as an essential part of the efforts exerted to raise the level of governance of the market and raise the competitive level of the Qatari market in the shadow of globalization of money markets, and in light of fierce competition to attract capitals in the markets of the region.