Extending Beneish's Model for Detecting Earnings Management: An Empirical Investigation of the Role of Corporate Governance, Earnings Quality, and Foreign Ownership رسالة دكتوراة

Abstract

This study examines earnings management practices within the financial environments of Amman and Palestine. It examines the relationship between corporate governance, earnings quality, and foreign ownership. This study aims to build a better prediction model than the Beneish M-Score model concerning earnings quality measures, corporate governance variables, and standard financial ratios. This new model aimed to find earnings manipulation within a more dispersed economic environment. The data used for the study are collected from 30 industrial companies listed on the Amman stock exchange and 11 on the Palestine stock exchange from 2017 till the end of 2023. It employs numerical methods such as discriminant analysis and logistic regression to determine the financial ratios, governance features, and earnings quality signals directly influencing earnings management. It explores the implications of foreign ownership on financial statements practices and what that means for multi-national firms. The results demonstrate that strong corporate governance and high earnings quality significantly reduce earnings manipulation. Given the economic uniqueness of Amman and Palestine, we must focus on defining the framework for governing work and financial extremes. The results demonstrate a significant performance improvement, surpassing the traditional Beneish M-Score model in its ability to forecast earnings. This leads to more openness, trust in the market, and following the rules.