Purpose

The purpose of this study is to examine the individual and combined effect of managerial ownership and external audit quality, as two control mechanisms, on earnings management.

Design/methodology/approach

This study applies ordinary least squares estimates on fixed-time effects panel regression model to test the impact of the investigated variables on earnings management for the whole population of banks and insurance companies listed at Damascus Securities Exchange (DSE) during the period from 2011 to 2018.

Findings

The empirical evidence suggests a negative non-linear relationship between managerial ownership (as proxied by board of directors’ ownership) on earnings management. However, neither audit quality nor the simultaneous effect of the managerial ownership and audit quality (Big 4) affects earnings management.

Research limitations/implications

DSE is dominated by the financial sector and the number of observations is constrained by the recent establishment of DSE and the small number of firms listed at DSE. In addition, the non-availability of data on executive directors’ and foreign ownerships restrict our ability to uncover the impact of different dimensions of ownership structure on earnings management.

Practical implications

First, it stimulates investors to purchase stocks in financial firms that enjoy both high managerial ownership, as they seem enjoying higher earnings quality. Second, the findings encourage external auditors to consider the ownership structure when choosing their clients as the financial statements’ quality is affected by this structure. Third, researchers may need to consider the role of managerial ownership when analyzing the determinants of earnings management.

Originality/value

It fills the gap in the literature, as it investigates the impact of both managerial ownership and audit quality on earnings management in a special conflict context and in an unexplored emerging market of DSE. It suggests that managerial ownership exerts a significant role in controlling earnings management practices when loose regulatory environment combines conflict conditions. However, external audit quality fails to counter earnings management practices when conditions are fierce.

中文翻译：

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大马士革证券交易所的收益管理和审计质量：管理层所有权重要吗？

目的

本研究的目的是检验管理层所有权和外部审计质量这两种控制机制对盈余管理的单独和综合影响。

设计/方法/方法

本研究应用固定时间效应面板回归模型的普通最小二乘估计来检验调查变量对 2011 年至 2018 年期间在大马士革证券交易所 (DSE) 上市的所有银行和保险公司的盈余管理的影响.

发现

经验证据表明，管理层所有权（以董事会所有权为代表）与盈余管理之间存在负非线性关系。然而，无论是审计质量还是管理层所有权和审计质量（四大）的同时影响都不会影响盈余管理。

研究限制/影响

DSE 以金融部门为主，观察数量受到 DSE 最近成立和 DSE 上市公司数量的限制。此外，无法获得有关执行董事和外国所有权的数据限制了我们揭示所有权结构不同维度对盈余管理的影响的能力。

实际影响

首先，它刺激投资者购买兼具高管理所有权的金融公司的股票，因为它们似乎享有更高的收益质量。其次，调查结果鼓励外部审计师在选择客户时考虑所有权结构，因为财务报表的质量受这种结构的影响。第三，研究人员在分析盈余管理的决定因素时可能需要考虑管理层所有权的作用。

原创性/价值

它填补了文献中的空白，因为它调查了管理所有权和审计质量在特殊冲突背景下和未开发的 DSE 新兴市场中对盈余管理的影响。这表明，当宽松的监管环境与冲突条件相结合时，管理层所有权在控制盈余管理实践方面发挥着重要作用。然而，当条件恶劣时，外部审计质量无法对抗盈余管理实践。