Abstract

This study explores the relationship between company earnings management and the relative value relevance of book value and earnings. The differential effect on the value relevance of earnings management (EM) from 2014 to 2018 for all firms listed on the Saudi Stock Exchange (Tadawul) is investigated by short-term versus long-term discretionary accruals. For firms whose EM is considered as an indication of its discretionary accruals, it is anticipated that earnings’ value relevance would be lower than firms that do not consider EM. The results show that EM discretionary accruals influence the value relevance of book value and earnings for the long-term compared to the short-term. The study’s finding is expected to shed light on applying the quality of firms’ financial reporting in protecting stakeholders’ interests by providing them with credible information free from earnings manipulations.

摘要

本研究探讨了公司盈余管理与账面价值与盈余的相对价值相关性之间的关系。通过短期和长期全权应计制，调查了2014年至2018年在沙特证券交易所（Tadawul）上市的所有公司对收益管理（EM）的价值相关性的差异影响。对于那些认为新兴市场可作为其酌情应计制指标的公司，预计其收益价值相关性将低于不考虑新兴市场的公司。结果表明，与短期相比，新兴市场自由裁量权的长期影响与账面价值和收益的价值相关性。