Ownership Structure, Earnings Manipulation, and Organizational Performance: The Case of Jordanian Insurance Organizations

Abstract

This study aims to investigate the direct relationship between ownership structure, earnings manipulation, and organizational performance, and‎then examine the mediating effect of earnings manipulation in the relationship between ownership structure and organizational performance.‎This study collected and analyzed secondary data published in financial reports related to all insurance organizations listed in the Jordanian‎market during the study period (from 2009 until 2018). A panel data analysis was conducted, giving a total of 200 observations. The findings‎of this study concluded that ownership concentration, foreign ownership, and organization size affect organizational performance proxied by‎ROA, ROE, and EPS, more specifically, ownership concentration and organization size have a positive effect, whereas foreign ownership has a‎negative effect. At the same time, board of director ownership, organizational ownership, and CEO compensation did not affect organizational‎performance. Next, the board of director ownership, ownership concentration, foreign ownership, and CEO compensation affect earnings‎manipulation separately. In addition, earnings manipulation positively affects organizational performance proxied by ROA, ROE and EPS.‎This means that the higher the earnings manipulation is, the higher the organizational performance is. Finally, earnings manipulation mediates‎the relationship between ownership concentration and foreign ownership of ownership structure, and organizational performance.