الملخص الإنجليزي
The current study focuses on the phenomenon of earnings management in the
eyes of stockholders and investors. It aims to determine the most important incentives
that may encourage managers of listed firms in Amman Stock Exchange to practice
the phenomenon of earnings management. Moreover, the study determines the ability
of investors and stockholders to detect the practices of the phenomenon. In addition,
it determines the effects of the practices of earnings management phenomenon on
the stockholders' reactions. The study assumes four types of incentives; (1) contracting
issues and related benefits, (2) income tax reduction, (3) increasing stock market
prices, and (4) avoiding the potential pressure of labor unions. A convenient sample
consists of 170 investors stockholders is selected. A questionnaire is used to gather
the required necessary primary data, where 153 responses had been received back in
a usable form. One sample t-test method is used to test the hypotheses of the study, at
95 Percent level of confidence. The study finds that contracting, income tax reduction,
stock market price increase, and the avoidance of the labor unions' pressure, are all
actual incentives to managers of firms to manage earnings. Moreover, the study finds
that investors and stockholders in Amman Stock Exchange have no enough ability to
detect the practices of earnings management and they tend to change their decisions
when they be informed with the existence of these practices.
