The mediating effect of accrual earnings management on the relationship between ownership structure and firm value: Evidence from Jordan

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Firm value is considered a primary and essential driver for investors when making investment decisions, so they are interested in the quality of the financial data in companies’ annual reports related to firm value in an attempt by the owners to improve the company’s image and raise its value. Therefore, this study examined the relationship between ownership structure and firm value through the mediating role of accrual earnings management. Panel data were extracted from the financial reports of 88 non-financial companies listed on the Amman Stock Exchange for 11 years (2009–2019). The Barron and Kenny, Sobel, and other test approaches were applied to investigate the mediation effect and mediating relationships. The outcomes identified a positive impact of managerial ownership on firm value and a positive impact of foreign ownership on firm value. Also, it showed a negative impact of managerial ownership and foreign ownership on accrual earnings management, while accrual earnings management positively impacted firm value. Regarding mediating relationships, the results identified a mediating effect of accrual earnings management on the relationship between managerial ownership and firm value and a mediating effect of accrual earnings management on the relationship between foreign ownership and firm value. However, accrual earnings management does not mediate the relationship between family ownership and firm value. This shows the importance of reducing accrual earnings management through the identities of investors (managerial and foreign), which helps increase control and improve the value of a company.

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    • Table 1. Study variables
    • Table 2. Chains of relationships
    • Table 3. Modern mediation effect testing
    • Table 4. Descriptive analysis
    • Table 5. Correlation matrix
    • Table 6. Regressions results
    • Table 7. Relationship mediation results
    • Conceptualization
      Laith Al-Shouha, Wan Nur Syahida Wan Ismail, Nik Mohd Norfadzilah Nik Mohd Rashid
    • Data curation
      Laith Al-Shouha, Ohoud Khasawneh, Wan Nur Syahida Wan Ismail
    • Formal Analysis
      Laith Al-Shouha, Ohoud Khasawneh, Wan Nur Syahida Wan Ismail, Nik Mohd Norfadzilah Nik Mohd Rashid
    • Funding acquisition
      Laith Al-Shouha, Ohoud Khasawneh
    • Investigation
      Laith Al-Shouha, Ohoud Khasawneh, Wan Nur Syahida Wan Ismail, Nik Mohd Norfadzilah Nik Mohd Rashid
    • Methodology
      Laith Al-Shouha, Ohoud Khasawneh, Wan Nur Syahida Wan Ismail, Nik Mohd Norfadzilah Nik Mohd Rashid
    • Project administration
      Laith Al-Shouha, Wan Nur Syahida Wan Ismail
    • Resources
      Laith Al-Shouha, Ohoud Khasawneh, Wan Nur Syahida Wan Ismail, Nik Mohd Norfadzilah Nik Mohd Rashid
    • Software
      Laith Al-Shouha, Ohoud Khasawneh, Wan Nur Syahida Wan Ismail, Nik Mohd Norfadzilah Nik Mohd Rashid
    • Supervision
      Laith Al-Shouha, Ohoud Khasawneh, Wan Nur Syahida Wan Ismail, Nik Mohd Norfadzilah Nik Mohd Rashid
    • Validation
      Laith Al-Shouha, Wan Nur Syahida Wan Ismail, Nik Mohd Norfadzilah Nik Mohd Rashid
    • Visualization
      Laith Al-Shouha, Ohoud Khasawneh, Nik Mohd Norfadzilah Nik Mohd Rashid
    • Writing – original draft
      Laith Al-Shouha
    • Writing – review & editing
      Laith Al-Shouha, Ohoud Khasawneh