Ali Mohammed Thijeel Post Graduate Institute for Accounting & Financial Studies, University of Baghdad, Iraq.
Email: asst.prof.ali@pgiafs.uobaghdad.edu.iq
Amira Neffati Institute Supérieur de Gestion, University of Tunis; Gouvernance d’Entreprise, Finance Appliquée et Audit Laboratory (GEF2A) Tunisia.
Email: neffati.emira@gmail.com
Wided Khiari Institute Supérieur de Gestion, University of Tunis; Gouvernance d’Entreprise, Finance Appliquée et Audit Laboratory (GEF2A) Tunisia.
Email: khiariwided@yahoo.fr
Hakeem Hammood Flayyih Al-Fandawi Post Graduate Institute for Accounting & Financial Studies, University of Baghdad, Iraq.
Email: hakeem.hmood@coadec.uobaghdad.edu.iq

Abstract:

This research seeks to examine the interrelationship among dividend policy (DP), earnings management (EM), and corporate governance (CG). DP is assessed both as a possible facilitator of EM practices and as a governance mechanism capable of mitigating financial reporting distortions. Drawing on a sample of 222 agribusiness firms based in the United States over the 2011–2021 period, the study empirically investigates these dynamics. The findings indicate that fluctuations in dividends can elucidate varying impacts on EM, depending on the nature of CG frameworks in place. Generally, modest increases in dividends associated with earnings growth are prevalent. In contrast, firms often resort to dividend reductions to mask sharp earnings declines and to counteract adverse investor sentiment. Furthermore, discriminant analysis reveals that firms characterised by strong CG—evident through significant managerial ownership, the presence of independent board members, and well-established audit committees—engage less in EM. Conversely, agribusiness entities with weaker governance structures are more prone to manipulative earnings practices. The research underscores that board-level dividend decisions can serve as informative signals or, where necessary, act as substitutes for comprehensive governance systems, thereby constraining managerial opportunism. This study contributes to the existing literature by elucidating the specific function of DP in facilitating or constraining EM and by emphasising the importance of integrated CG frameworks in sustaining financial integrity within the agribusiness sector. These insights are particularly relevant for policymakers, investors, and regulators aiming to enhance market discipline and promote environmentally sustainable financial conduct in agriculture.

Keywords:Dividend Policy, Earnings Management, Corporate Governance.