The effect of earnings management on profitability: Evidence from Palestine

Abstract

This research examined the influence of earnings management on the profitability of non-financially-listed companies on the Palestine Stock Exchange between 2017 and 2021. The study employed regression analysis to measure the impact of earnings management on profitability using a sample of nonfinancial listed companies, which included (31) listed companies. SPSS, a statistical analysis program, assisted the researcher in concluding a negative relationship between the dependent variable earnings per share and independent variables earnings management measured by discretionary accruals using the Jones model 1995 and free cash flow at the 1% level. However, there is a statistically significant positive correlation between dividends per share and the profitability of corporations listed on PEX at the 1% level. Lastly, the outcome shows no statistically significant association between the profitability of corporations listed on the PEX and the control variables. The findings, particularly the negative relationship between earnings per share and earnings management and the positive correlation between dividends per share and profitability, contribute new perspectives to the existing body of knowledge on financial performance in emerging markets.