The impact of cash dividends and firm factors on earnings management

Abstract

The purpose of this paper is to explain how both of the cash dividends and firm factors affect the earnings management. A statistical program called Statistical Package for Social Science (SPSS) is used to obtain this purpose. The sample taken consists of 50 companies listed in the EGX50 for the period from 2018 to 2020. The financial statements used are the comprehensive income statement, statement of financial position and profit and loss statement. The independent variables are cash dividends which are measured by dividends PAYOUT ratio, and firm factors which are Firm Performance through (ROA), Firm Size measured through (Log (Total assets)), and Firm Leverage measured through (Total Debt/Total equity). While earnings management is considered as the dependent variable and it is measured by Modified Jones Model. The results are that there is a no significant relationship between cash dividends and earnings management, in addition, there is no significant relationship between firm factors and earnings management. The limitations that faced this paper is that the sample period used for this research is of three years only due to the lack of data availability. Which resulted in providing insignificant relation between the variables.