<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This research examines the moderating effect of family ownership over the relationship between board independence and earnings management. Using information of industrial companies indexed on Amman Stock Exchange, this research provides evidence of negative relationship between board independence and earnings management, proposing that higher percentage of board independence is related with more effective monitoring to reduce earnings management. Moreover, the results document that the relationship between board independence and earnings management becomes weak when there is an interaction with family ownership control. These outcomes indicate that an increase in the percentage of independent directors to mitigate earnings management is less likely to be influential in the case of family controlled firms. The results of this research could be valuable to regulators in their efforts to restrict the incidence of earnings management and improve the quality of monitoring mechanisms, especially in an environment where the capital market is still evolving and the legal protection and law enforcement are weak.</p></abstract>

This research examines the moderating effect of family ownership over the relationship between board independence and earnings management. Using information of industrial companies indexed on Amman Stock Exchange, this research provides evidence of negative relationship between board independence and earnings management, proposing that higher percentage of board independence is related with more effective monitoring to reduce earnings management. Moreover, the results document that the relationship between board independence and earnings management becomes weak when there is an interaction with family ownership control. These outcomes indicate that an increase in the percentage of independent directors to mitigate earnings management is less likely to be influential in the case of family controlled firms. The results of this research could be valuable to regulators in their efforts to restrict the incidence of earnings management and improve the quality of monitoring mechanisms, especially in an environment where the capital market is still evolving and the legal protection and law enforcement are weak.

Board independence, earnings management and the moderating effect of family ownership in Jordan

Management & Marketing

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

This research examines the moderating effect of family ownership over the relationship between board independence and earnings management. Using information of...

Board independence, earnings management and the moderating effect of family ownership in Jordan

Published Online: Jul 04, 2018

Page range: 985 - 994

DOI: https://doi.org/10.2478/mmcks-2018-0017

Keywords
family control, board independence, earnings management, Jordan

© 2018 Mohammed Idris et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Board independence, earnings management and the moderating effect of family ownership in Jordan

Published Online: Jul 04, 2018

Page range: 985 - 994

DOI: https://doi.org/10.2478/mmcks-2018-0017

Keywordsfamily control, board independence, earnings management, Jordan

© 2018 Mohammed Idris et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
family control, board independence, earnings management, Jordan