تأثير حجم الشركة على ممارساث إدارة الأرباح : دراسة تطبيقية من واقع السوق الأردنية

Abstract EN

This study aims to test the impact of the companys size on the earnings management practices in the Jordanian industrial companies.

To achieve the objective of the study, all Jordanian Industrial Companies listed on Amman Stock Exchange (ASE) between 2000-2011 have been selected.

Utilizing unbalanced data method, discretionary accruals as proxy of the earnings management practices have been computed using the 1991 modified Jones model, and the natural logarithm of the total assets of the company have been computed as proxy of the firms size, in addition to three control variables : previous performance, sales growth, and management efficiency.

The study conducts the parametric analysis using a multivariate probit binary choice analysis model.

The study has concluded that the size of the firm affects the tendency of the management to practice earnings management, as an increase in the size of the firm increases the probability of practicing earnings management by 99.92 % in the Jordanian industrial companies.

The study has also concluded that large firms engage in more earnings management than smaller firms, as the percentage probability of practicing earnings management in the large firms is 84.52 % compared to 54.98 % in the small firms.

This result is consistent with the institutional characteristics of the large firms, as that the institutional characteristics of the large-sized firms play a motivation and a catalyst for earnings management and provide a suitable environment for such practices compared to the small-sized companies.

Another finding of the study is that management efficiency is associated inversely with the earnings management practices, so that with the increase of management efficiency, the probability of practicing earning management falls because of the reduced need for such practices.