The impact of firm-specific characteristics on earnings management: evidence from GCC countries

This study aims to decide whether listed companies in GCC countries practice earnings management (EM). Further, effect of a set of firm-specific characteristics on EM practices is examined. The study sample consists of 332 listed companies during the period 2010-2015. The study estimates the discretionary accruals (DAs) using the modified Jones (1995) model as a proxy for EM to reveal EM activities. Multiple regression analysis is used to test the study hypotheses and achieve the study aims. The results reveal that companies are engaged in EM practices except for Oman and they are practicing downward EM activities (income-decreasing). The results show that the company size and leverage have an insignificant impact on EM practices in GCC countries. Company's losses affect EM for GCC countries except for Bahrain. This further evidence confirms that most GCC countries are engaged in EM and practice EM through income-decreasing discretionary accruals.