The Influence of Leverage and Profitability on Earnings Quality: Jordanian Case

Abstract

The fundamental target of financial accounting is to provide information helpful to investors in making forecasting about firms performance. The evolution of income reporting as the essential source for investor decision making has been well authenticated and income reporting helps economic society in a different ways. (Schroeder, et al., 2014) The present study aims to survey the influence of leverage measured by debt ratio separately on Earnings Quality, and the influence of profitability measured by return on asset (ROA) separately on Earnings Quality, and finally the influence of leverage and profitability together on Earnings Quality. The paper covered the period from 2011 to 2015, and employed some statistical techniques on all listed Islamic Banks at Amman Stock Exchange (ASE) to revealed that there is a significant influence of debt ratio on the listed Jordanian Industrial companies’ Earnings Quality, and there is a significant influence of return on asset (ROA) on the listed Jordanian Industrial companies’ Earnings Quality, Finally, there is a significant influence of leverage and profitability on the listed Jordanian Industrial companies’ Earnings Quality