The application of creative accounting in earnings management for listed companies

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Abstract

This study explores the practice of creative accounting in earnings management among Palestinian companies listed on the Palestine Stock Exchange (PEX) from 2018 to 2023 (Abdeljawad & Abu Alia, 2022). Using a comprehensive survey approach across all public shareholding sectors, the research applies statistical tools via Statistical Package for the Social Sciences (SPSS) and Excel to examine the extent and patterns of earnings management. Findings reveal that earnings management is actively practiced, particularly in the industrial, insurance, and investment sectors, with variation across the study years. The research emphasizes the need for further exploration of additional variables influencing earnings management and recommends future comparative studies with international markets to broaden understanding. Practical recommendations include enhancing the independence and effectiveness of audit committees, strengthening the regulatory role of the Palestine Capital Market Authority, and establishing more rigorous accountability mechanisms. The study also highlights the necessity of improving accounting practices and financial disclosure, especially in the banking sector. This research adds value by offering a focused analysis of creative accounting within the Palestinian context, contributing to both academic knowledge and practical reforms aimed at reducing the adverse effects of earnings management on stakeholders. It serves as a foundation for future efforts to improve transparency, governance, and financial integrity in Palestinian public companies.

Keywords: Practice of Creative Accounting, Earning Management, Palestinian Companies Listed on the Palestine Stock Exchange

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: G1, G10, G32, G33, M41

Received: 29.01.2025
Revised: 08.05.2025; 08.10.2025
Accepted: 14.11.2025
Published online: 18.11.2025

How to cite this paper: Assad, S. N.B. (2025). The application of creative accounting in earnings management for listed companies [Special issue]. Journal of Governance and Regulation, 14(4), 259–268. https://doi.org/10.22495/jgrv14i4siart3