Using Managerial Ownership in Explaining the Relationship between Board Characteristics and Real Earnings Management: Evidence from Saudi Arabia

This study examines the relationship between board characteristics and real earnings management in 91 non-financial firms listed on the Saudi Stock Exchange from 2018 to 2021. The research investigates the association of board size, board independence, the proportion of female directors, and the number of board meetings with real earnings management, as well as the moderating effect of managerial ownership on this relationship. The findings show that board size, board independence, and the proportion of female directors have a significant and negative effect on real earnings management, and that the number of board meetings has a significant positive relationship with real earnings management. The research also finds that the effect of board characteristics on real earnings management is strengthened by the presence of managerial ownership. This research contributes to the existing literature on corporate governance by providing insights into the association between board characteristics and real earnings management in the context of Saudi Arabia. The findings also have implications for improving corporate governance practices and enhancing earnings quality in emerging economies.