IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v18y2025i1p22-d1562913.html
   My bibliography  Save this article

The Nexus of Research and Development Intensity with Earnings Management: Empirical Insights from Jordan

Author

Listed:
  • Abdelrazaq Farah Freihat

    (Department of Accounting, Faculty of Business, Al-Balqa Applied University, Al Salt 19117, Jordan)

  • Ayda Farhan

    (Higher Colleges of Technology (HCT), Al Ain Campuses, Al Ain P.O. Box 17258, United Arab Emirates)

  • Ibrahim Khatatbeh

    (Department of Banking and Finance Sciences, Business School, The Hashemite University, Zarqa 13133, Jordan)

Abstract

Driven by positive accounting, agency, and political and economic theories, this study examines the relationship between research and development (R&D) intensity and earnings management for listed pharmaceutical companies in the Amman Stock Exchange (ASE) between 2008 and 2021. Employing panel regression methods, the results reveal a positive association between R&D investment and earnings manipulation. Specifically, after two or three R&D delays, the association survived. Moreover, firm size negatively affects earnings management, showing that larger firms have less tendencies to conduct earning manipulation. Furthermore, financial leverage and earnings management are strongly connected, showing that firms may utilize earnings management to avoid credit covenants. The findings emphasize distortions in R&D reporting and profit management within Jordan’s financial reporting practices. Enhancing the accuracy of R&D investment disclosures, minimizing profit manipulation, and fostering greater transparency are crucial. Jordan’s regulators should improve capitalization standards, transparency, auditing, and shareholder activism.

Suggested Citation

  • Abdelrazaq Farah Freihat & Ayda Farhan & Ibrahim Khatatbeh, 2025. "The Nexus of Research and Development Intensity with Earnings Management: Empirical Insights from Jordan," JRFM, MDPI, vol. 18(1), pages 1-18, January.
    • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:1:p:22-:d:1562913
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/18/1/22/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/18/1/22/
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:18:y:2025:i:1:p:22-:d:1562913. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.