Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)

Abstract

The Impact of the Board of Directors Characteristics on Earnings Quality of Listed Industrial Companies on the Amman Stock Exchange

Author(s): Leqaa Naife Al-Othman, Mahmoud Nawwaf Al-Zoubi

Accounting earnings represent the main source of many economic decisions. Therefore, the quality of these earnings is an important issue for decision makers. Since the main party responsible for company, making earnings and preparing financial statements is the board of directors, this study came to identify the impact of board of directors characteristics on the earnings quality of listed industrial companies, from 2011 to 2017. In doing so, this study explored the board of directors' characteristics (i.e., board size, duality, directors' ownership, independence directors, experience, qualification, and gender of board of directors). The final sample of the study comprised 33 industrial companies listed on the Amman Stock Exchange, because of the availability of their data during the study period. The results showed that the earnings quality of industrial companies listed on the Amman Stock Exchange is 73.6%. Additionally, there is a statistically significant impact from board characteristics on earnings quality, for instance the board size and the experience of board members have a positive and significant impact on earnings quality, while duality has a negative significant impact on earnings quality. The other characteristics, board independence, the qualification of board members and the gender of board members, had no significant impact on earnings quality. Due to the lack of studies on earning quality in Jordan, This paper is an attempt to fill the gap in the literature by providing empirical evidence on the effect of board of directors' characteristics on earning quality in Jordan as an emerging economy.