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This study aims to examine the influence of audit committee existence and internal audit function on the earnings management of companies.

This paper uses generalised least squares regression to investigate the influence of audit committee existence, internal audit function and the interaction of these two mechanisms on earnings management for a sample of 86 industrial companies listed on the Amman Stock Exchange over a four-year period from 2007 to 2010. The paper uses the extent of discretionary accruals as the proxy for earnings management.

This paper finds that audit committee existence and the internal audit function reduce the level of earnings management. The number of meetings between the audit committee and internal audit function also reduces discretionary accruals. Overall, this study finds that audit committee existence and internal audit function decrease earnings management and improve the financial reporting quality.

The main contribution of this study is that it investigates the combined effects of audit committee existence and internal auditors on earnings management. Furthermore, this study is the initial paper to examine the impact of audit committee and internal audit on earnings management in Jordan.

The purpose of this paper is to extend previous research by empirically investigating the effect of the disclosure quality (DQ) on the magnitude of the earnings management (EM) among Jordanian companies listed in Amman Stock Exchange.

This study uses the cross-sectional version of the modified Jones model, where discretionary accruals are used for the EM proxy. Generalized least square regression is used to examine the influence of the DQ on EM for a sample of 86 industrial companies in the period of the years from 2007 to 2010.

The result produces evidence on the negative association between DQ and EM. The result also evidences the view that as the level of the disclosure is high, the magnitude of the EM reduces and, in turn, increases the financial reporting quality.

As there are relatively few researches conducted in this area specifically among Jordanian firms, the study broadens the scope by providing empirical evidence of the relationship between DQ and EM. This paper is the first empirical study to investigate the impact of the DQ on EM among Jordanian companies.

The purpose of this paper is to examine the association between internal corporate governance mechanism and earnings management of Jordanian companies. More specifically, the author examines several hypotheses regarding the relationships between ownership and earnings management.

This study measures the magnitude of discretionary accruals as a proxy for earnings management using the cross-sectional modified Jones model. A number of econometric techniques are used including ordinary least squares and generalized least squares to test the relationship between company ownership and earnings management, using a sample of 62 companies listed on the Amman Stock Exchange.

The results revealed that insider managerial ownership, institutional ownership, external blockholder, family ownership and foreign ownership have superior influence on financial reporting quality, as it is, to a greater extent, potentially able to curtail earnings management. The findings contended that the aspects of ownership structure have a significant influence on earnings management, which is in agreement with the theories of corporate governance and opinions that have been highlighted through a number of international bodies.

Due to lack of data, the paper depends on cross-sectional data applied to isolate abnormal accruals.

The evidence may be conceivably beneficial as a supporting fundamental for regulatory action, particularly those that affect the ownership structure. The findings have significant implications for regulators as well as supervisors, who will benefit by the comprehension of how ownership structure affects earnings management and enhance financial reporting quality.

The current research produced its essential contribution through empirically displaying that ownership structure has different implications on earnings management. Moreover, the results recommended that both policymakers and researchers would no longer contemplate ownership structure as a whole, given that ownership structure has different implications on earnings management, measured by the discretionary accruals.

The purpose of this paper is to test the association between audit quality and earnings management (EM). Audit quality studies documented that accruals would reduce when the auditor is independent or the audit firm is large.

This paper uses generalised least square regression to investigate the influence of audit quality on EM. The sample contained 86 companies listed on the Amman Stock Exchange from 2007 to 2010. The cross-sectional modified Jones model was employed to measure discretionary accruals as a proxy for EM.

This paper revealed that there is a significantly negative association between audit quality and EM. The result inferred that EM level is significantly lower among companies using the services of independent auditors. Moreover, this study exposed that the level of EM is significantly less among companies hiring a Big 4 audit firm, as compared to companies utilising the service of a non-Big 4 audit firm.

The measurement error, which is a rigorous concern for studies on EM, is one of the limitations in this study. Hence, the current study wholly inherited the limits of the modified Jones model.

The findings based on the current study would provide beneficial information for regulators in Jordan and other countries with an institutional environment similar to that of Jordan. Moreover, the results provided valuable information to investors in assessing the influence of audit quality on financial reporting quality (FRQ).

The current study contributed to auditing and corporate governance literature and its influence on EM among Jordanian companies. This research will be of value to companies seeking to reduce EM and enhance FRQ.