Cosmetic Accounting Practices among Jordanian Firms? The Role of Ownership Concentration and Political Influence.

Deaa Al-Deen Al-Sraheen; Raneem Mohammed  Saleh; Mohammad Husain  Alsmadi

Deaa Al-Deen Al-Sraheen Al-Zaytoonah University of Jordan, Business Faculty, Department of Accounting
Raneem Mohammed Saleh Accounting Program, Al-Zaytoonah University of Jordan
Mohammad Husain Alsmadi Al-Zaytoonah University of Jordan, Business Faculty, Department of Accounting

Keywords: Cosmetic Accounting, Earnings Quality, Ownership Concentration, Political Influence

Abstract

Cosmetic accounting is a process used by accountants who have a vast knowledge of accounting rules to address the figures reported in the financial reports. This study focuses on the crucial role of the concentration of ownership and the political influence on the quality of earnings among Jordanian industrial firms listed on the ASE during the period 2014-2017. The results of regression indicate that there is a negative impact of both of ownership concentration and political connection on the quality of earnings reported in financial reports. This means that the most significant shareholders use their power, and the political role of board members to manipulate earnings to be consistent with their interests. The study found that other important factors may affect the quality of earnings such as foreign ownership, especially with the migration of some capital to Jordan as a safe environment for investment, particularly under the political and economic tension in neighboring countries.

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