The Impact of Audit Committee Characteristics on Real Earnings Management: Evidence from Jordan

t Accounting scandals and corporate failures, like Enron, WorldCom and Toshiba, have driven the regulators to look into the importance and role of the audit committee (AC) in the practicing of real earnings management (REM). This study investigates the impact of AC characteristics, i.e., size, expertise, meetings and independence, on REM using a sample of 721 firm-year observations of firms listed on the Amman Stock Exchange (ASE) for the 2011 to 2017 period. Interestingly, the results reveal that AC expertise, AC independence and AC meetings have a negatively significant relationship with the level of REM; while there is no relationship between REM and AC size. The findings from the current study can help regulatory bodies and policymakers in instituting policies and strategies with regards to the credibility of financial reports in Jordan. Future studies may consider the effect of other AC characteristics, like AC quality, AC members’ ownership and AC members’ remuneration on REM.