EARNINGS MANAGEMENT, COMPANY VALUE, CORPORATE GOVERNANCE, EVIDENCE FROM NON-FINANCIAL COMPANIES

Abstract

The present study aimed to assess the influence of earnings management on firm value, considering the moderating role of corporate governance. Corporate governance, as a moderating factor, encompasses managerial discretion, audit organisation, board structure and disclosure, and shareholder rights within service and industrial firms listed on the Saudi Stock Exchange. Data were collected from 740 firm-year observations of non-financial companies listed on the exchange. The study employed panel data regression methods, utilising fixed effects and ordinary least squares (OLS) estimation to conduct the analysis. The findings indicate that opportunistic earnings management by managers offers minimal benefits to firms with robust corporate governance mechanisms. Furthermore, the relationship and robustness tests demonstrate that effective corporate governance mechanisms constrain managerial opportunism in earnings management, thereby preventing the associated decline in firm value. Additionally, the study highlights certain limitations encountered by the author and offers insights for future researchers to address existing gaps in the literature.