Abstract: Palestine exchange market is one the developing market in MENA area, but it has some unique features associated with continuous struggles to survive. With these condition the possibility of financial reporting quality specially in relation to earning management become questionable. However, studies in developed countries revealed that there are relations between corporate governance and audit quality in accrual earning management. Understanding the factors of improving the quality of earning management in Palestine is important to provide an insight of how to develop the PEX market. Therefore, this study is an exploration into the Palestinian exchange market to increase the knowledge regarding the accrual earning management behavior and its antecedents. This study design has some characteristics, which formulate its design and include; scientific research, deductive research; quantitative research, and secondary data research. The model is composed of nine variables; the highest outcome variable (dependent variable) is firms’ performance; Seven independent variables from corporate governance category and audit quality category; and accrual earning management as a mediator. The data collected from secondary data reports published by the Palestinian stock exchange agency (PEX) or by the companies in its official websites. The dataset have 320 records that related to 32 companies in 10 years and model relations analysis are based on OLS regression models. Three relations are accepted and four relations are rejected. The relations from variables; Concentrated Ownership, Managerial Ownership, Institutional Ownership, and CEO Duality are rejected. The highest predictor is external audit (Beta = -0.327). The second predictor is board independence (Beta = -0.212). The third predictor is audit committee (Beta = -0.122). From the five corporate management variables, only board independence has significant relationship with accrual earning management. Similar evidence from previous studies can be found but in relation with earning management and in different environment, in Malaysia [1], and in Indonesia [2]. External audit relation with earning management is mapped with previous studies in different environments; in Indonesia [2]; in Jordan [3]; and in UAE [4]. And audit committee relation with earning management is mapped with previous studies in different environments; in Iran [5], in India [6], and in Pakistan [7].
Keywords: Palestine Exchange Market, PEX, Accrual Earning Management, External Audit, Audit Committee, Corporate Governance.
Title: Corporate Governance and Audit Factors as Predictors for Accrual Earning Management among Palestine Listed Companies
Author: Osama Abdelrahim Khader, Dr. Azadeh Amoozegar
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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