Earnings Management and its Impact on Accounting Earnings Quality - Experimental Study on the
Jordanian Industrial Public Shareholding Companies
Abdulnaser Ibrahim 1 , Hanan Al Awwawde2
This study aimed to examine the extent to which Jordanian companies practice earnings management, and
to find out the impact of earnings management on earnings quality. The study relied on a stratified random
sample of 20 industrial Jordanian companies listed on the Amman Stock Exchange during the period (2005
to 2012). The study used earnings quality as a dependent variable, while the independent variables include
earnings management, in addition to three control variables that include company's size, leverage ratio and
return on assets. The results showed low earnings quality of the Jordanian industrial companies in general,
and proved that Jordanian industrial companies practice earnings management that aimed to reduce earnings.
The results of regression analysis showed that earnings management had a negative and significant effect on
earnings quality, while the leverage ratio had a positive and significant effect on earnings quality. The study
recommended to formulate the accounting principles, policies and standards so as to prevent the companies
from manipulate earnings, and recommended that importance of applying corporate governance for all
public shareholding companies in Jordan.
Keywords: Earnings Management, Earnings Quality, Jordanian Industrial Companies.