The Mediating Role of Investment Efficiency on The Relationship between Earnings Quality and Firm Performance

Abstract

This study aims to examine the mediating effect of investment efficiency on the relationship between earnings quality and firm performance. It provides evidence from Jordanian nonfinancial firms over the period from 2012 to 2019 using the panel data analysis method. The findings conclude that earnings persistence, earnings predictability, and earnings smoothness significantly affect firm performance. Furthermore, earnings persistence and earnings smoothness significantly affect investment efficiency. Moreover, investment efficiency mediates the relationship between earnings persistence, earnings smoothness, and firm performance. Finally, the current study suggests that other factors influencing company performance be investigated in future research, particularly in diverse nations like the MENA.