ACCRUAL BASED AND REAL EARNING MANAGEMENT ASSOCIATION WITH DIVIDENDS POLICY “THE CASE OF JORDAN”

Abstract

This study aims to examine the association between earning management and dividend policy.  Industrial companies listed in Amman Stock Exchange (ASE) are used as a sample for the years from 2010 to 2016.  The dividend policy (DP) measured by dividends (DPO) payout ratio while earnings management (EM) measured by discretionary accruals (DAER) and real earning management (REM).  Variables such as Firm size (SIZE), return on equity (ROE), financial leverage (LIV) and market to book value (MB) were also utilized as control variables.  Ordinary least square was used to estimate the model built for the study and modified Cross Sectional models of this paper adopts the two modified Models of Kothari et al. (2005) and Roychowdhury model (2006).  Our results show that dividend policy of a firm has a positive significant association with earnings management for.  On the other hand the association between dividends policy and real earning management it has not been supported statistically.