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Mathematical Analysis to Measure Corporate Governance Reforms Impact on Earnings Management: Evidence from the Saudi Economy after Vision 2030 |
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PP: 171-183 |
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doi:10.18576/jsap/150202
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Author(s) |
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Rabab Hamdy Abdalhamid,
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Abstract |
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| The current study investigates the relationship between corporate governance reforms (CG) and earnings
management (EM). Additionally, it examines how contextual factors, such as firm size and leverage, affect the relationship between CG and EM in annual reports. To conduct this analysis, the study utilized the annual reports of selected Saudi companies for the years 2020–2024. The final sample comprised a balanced panel dataset of 86 non-financial Saudi-listed companies, resulting in 430 firm-year observations. Using statistical software (SPSS 26; IBM SPSS AMOS 22), the regression results reveal varying effects of governance factors on EM within Saudi firms. There is a negative relationship between EM and the factors of managerial ownership (Man_Own), board independence (BIND), and audit committee size (ACZ). These findings suggest that board independence contributes to reducing EM. Furthermore, the results indicate that larger audit committees enhance oversight and transparency, which consequently helps to curb earnings manipulation. Conversely, a positive correlation was found between board size (BSIZE) and EM in Saudi firms, suggesting that larger
boards may suffer from weak oversight and coordination challenges that facilitate earnings manipulation by management. |
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