Earnings Management, Accruals and Stock Liquidity

Sayari, Sonia; Omri, Abdelwahed

doi:10.15640/jfbm.v5n1a2

Cited by 10 publications

(14 citation statements)

References 37 publications

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“…Our outcomes witness a negative association between real earnings management (REM) and ROA, while accrual-based profit manipulation (AEM) and ROA are positively correlated. This finding is consistent with the studies of Tabassum et al (2013), Sayari and Omri (2017), Darmawan et al (2019), Abbas andAyub (2019), andLi et al (2020), whereas it is not similar to some studies such as Rodriguez-Ariza et al (2016), andDakhlallh et al (2020). In general, it seems that AEM used among Iranian companies has been efficient profit management, for it has led to economic value being added (Abbas and Ayub 2019).…”

Section: Results Of the First Research Modelsupporting

confidence: 86%

“…On the other hand, the results of many research have shown that profit management leads to the improved financial condition of companies (Sayari and Omri 2017;Khuong et al 2019;Abbas and Ayub 2019;Mostafa 2020;Zhang and Ayisi 2020;Nobakht and Acar 2021). For example, Sayari and Omri (2017) saw a positive relationship between discretionary accruals and Tunisian firms' stocks, indicating that discretionary accruals allow Tunisian investors to construct their stocks portfolios optimally. Abbas and Ayub (2019) also examined the behavior of earnings management for Pakistani non-financial listed firms for the period of 15 years from 2003 to 2017.…”

Section: Earnings Management and Corporate Performancementioning

confidence: 99%

“…So far, some research has been done on the impact of earnings management on corporate financial performance (Tabassum et al 2013;Gill et al 2013;Mehrani and Noruzi 2015;Rodriguez-Ariza et al 2016;Sayari and Omri 2017;Okafor et al 2018;Darmawan et al 2019;Khuong et al 2019;Abbas and Ayub 2019;Mostafa 2020;Zhang and Ayisi 2020;Dakhlallh et al 2020;Nobakht and Acar 2021), while some others have focused on the relationship between related party transactions and firm value (Cheung et al 2006;Xiao and Zhao 2009;Kohlbeck and Mayhew 2010;Pozzoli and Venuti 2014;Tambunan et al 2017;Fazli 2019;Hendratama and Barokah 2020;Ashrafi et al 2020), each of which has had different results for various reasons. This gap is fully felt in the research literature to simultaneously examine the effects of earnings management as well as related party transactions on corporate financial performance during a financial crisis.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Earnings Management, Related Party Transactions and Corporate Performance: The Moderating Role of Internal Control

Zimon

Appolloni

Tarighi

et al. 2021

Risks

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The primary purpose of this study is to investigate the impacts of earnings management (EM) and related party transactions (RPTs) on corporate financial performance in an emerging market, Iran. This paper also aims to examine the moderating role of internal control weakness (ICW) in the relationship between them. The study sample includes 108 Iranian manufacturing companies listed on the Tehran Stock Exchange (TSE) between 2013 and 2018, and panel data with random effects are used to test the hypotheses. When an accounting-based measure called ROA is defined as a proxy for corporate performance, the results show that there is a negative association between real earnings management (REM) and corporate financial situation, while accrual-based earnings management (AEM) and firm value are correlated positively. However, when Tobin’s Q index is defined as a proxy for corporate performance, we do not find any significant association between them. Consistent with the tunneling hypothesis or agency theory, our findings confirm RPTs damage corporate value (ROA and Tobin’s Q) because managers probably consider it a mechanism to exploit enterprise resources owing to existing conflictual interests. Moreover, purchase-related party transactions lead to lower ROA, whereas sale-related party transactions and Tobin’s Q are correlated negatively. Moreover, weak internal control has a positive moderating influence on the linkage between AEM and Tobin’s Q index. Finally, we provide robust evidence that there is a positive association between sale growth and institutional owners with ROA and Tobin’s Q, although financial leverage and mergers and acquisitions (M&A) have a destructive effect on corporate value.

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Section: Results Of the First Research Modelsupporting

confidence: 86%

Section: Earnings Management and Corporate Performancementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Earnings Management, Related Party Transactions and Corporate Performance: The Moderating Role of Internal Control

Zimon

Appolloni

Tarighi

et al. 2021

Risks

View full text Add to dashboard Cite

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“…For example, accruals quality can be used to enmesh the ability of earnings and signal private information to measure the company performance (Dechow, 1994). Sayari and Omri (2017) showed that low EQ will result in higher liquidity costs because real earnings management reflects low accounting information quality. On the one hand, Dechow (1994) discussed that managers in public shareholding companies were able to opportunistically manipulate return, and this affects the company's performance.…”

Section: Discussionmentioning

confidence: 99%

Does Earnings Quality Affect Companies’ Performance? New Evidence from the Jordanian Market

Saleh¹,

Afifa²,

Alsufy³

2020

JAFEB

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This study aims to investigate the importance of earnings quality as a determinant of companies' performance. It provides some empirical evidences from an emerging market, specifically from the Jordanian market. This study developed an econometric model for the effect of earnings quality on the companies' performance using empirical evidence. The study employs a panel data analysis method by using a sample of all Jordanian industrial public shareholding companies listed on Amman Stock Exchange (ASE) during 2010-2018. The results reveal that Return on Assets (ROA), Return on Equity (ROE), and Earnings Per Share (EPS) as proxies of company's performance are affected by the earnings quality. This provides the importance of positive earnings quality that eventually influences the companies' performance. The results of this study suggest that the higher control level on the managers' behavior and its outcome will have an effect on earnings quality, and thus the company's performance increases. As well as, high relevance of accounting information will improve earnings quality, and thus earnings quality with the interaction factors of the company's environment work on improving performance. As a conclusion, this study can work as a reference to assist standard setters, security analysts, regulators and other accounting-information users in appraising relation between the earnings quality and companies' performance.

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“…Accounting indicators published by firms remain a free source of information for the financial market (Sulkowski et al, 2019b). However, the degree of freedom afforded by accounting policies allows managers to manipulate financial statements at their discretion to mislead stakeholders as to the economic conditions of business (Sayari & Omri, 2017). Other authors in the field of earnings management are Jona, Filatotchev & Livne (2019), who in their work deal with threats of enforcement by the Securities and Exchange Commission (SEC) and private litigation affecting earnings management in IPO prospectuses.…”

Section: Literature Reviewmentioning

confidence: 99%