Evaluations on the Earning Quality of Listed Firms in Jordan

Earnings Quality is a crucial indicator of companies which may have negative earnings surprises and underperform due to high amounts of accruals. Earnings quality is a relative measure and as thus is interpreted relative to some benchmark. Numerous stakeholders including company’s managers, stock analysts, investor and other participants in capital market focus on the main figure of financial statements. To measure the earnings quality in context of Jordan this study adopted the methodology of IASB framework and based on five proxies we measured the earnings quality of listed firms in Jordan. The study has been divided into two phases, in the first phase of study we have determined the five proxies of earning quality based on the secondary data collected from Amman stock exchange while in the second phase of study we have measured the earning quality index to rank the firms based upon their earning quality. Results have revealed that in year 2012 Al-Kindi Pharmaceutical Industries Plc is ranked as best performed with the highest earning quality index score of 10.99. In year 2013 Jordan Cement Factories has highest earning quality index score which is 40.09, in 2014 National Steel Industry has highest earning quality index score which is 9.01. Finally, in year 2015 National Steel Industry has highest earning quality index score with value of 48.04. These analysis has indicated that overall earning quality of firms vary over the years. The study concludes with managerial implications and some suggestions for the future research.