This paper aims at investigating the effect of board of directors attributes on real earnings management (REM). A panel data of 78 Egyptian listed companies was collected over the period 2008–2017 to test the hypotheses. The results of the system generalized method of moment model revealed that the board size is negatively and significantly correlated with REM proxies, except for abnormal cash flows from operations (ABCFO) measure. Whereas, board meetings are positively and significantly related to REM except for ABCFO. Furthermore, board independence and chief executive officer duality provided varying results due to different REM proxies that have been used in this paper. The results of this study highlight the fact that there is no unified corporate governance (CG) system that fits all countries; therefore, each country should form its CG code in a way that takes into consideration its economic, political, legal, and institutional needs. Furthermore, regulators have the motivation to enhance relevant regulations and rules and maintaining a well-organized regulation system, where this would help in improving the effectiveness of the board as well as protect the investors by reducing the level of earnings manipulation. In investment activities, investors should take into account the attributes of a company’s board to avoid investing in firms that are more liable to conduct earnings management; consequently they could maximize the benefits of investments.

This paper investigates the nonlinear relationship between capital structure and firm performance in the MENA region using a sample of 499 listed firms over the 2007–2020 period, or 6986 firm-year observations. Specifically, we examine the size-threshold effect in the capital structure–firm performance nexus. To do so, this study applies a dynamic panel threshold regression model (DPTR). The findings show that there is a nonlinear relationship between debt and firm performance (Tobin’s Q, ROA, and ROE). Specifically, the threshold values of firm size for the three models are estimated at 9.126 (about $1 million), 15.48 (about $5 million), and 16.816 (about $20 million), respectively, between the low- and the high-sized regimes. In the lower regime, the firm’s value (Q) increases when debt increases; however, in the higher regime, this value decreases when debt increases. Furthermore, in the lower regime, the performances (ROA and ROE) of small firms decrease when debt increases; however, in the upper regime, when debt increases, the performances of large firms increase. The results are several robustness tests. These results support the predictions of signal, pecking order, and trade-off theories. Managers of large (small) MENA firms should increase (decrease) the use of debt to improve performance.

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This paper analyzes the nonlinear relationship between corporate ownership structure and income manipulation through accrual-based earnings management in the Egyptian context. To do so, we develop a sample of 78 listed non-financial firms, covering the period 2008–2017. Using the dynamic panel threshold analysis approach (Seo and Shin in J Econom 195: 169–186, 2016), we found a nonlinear relationship between ownership structure and earnings manipulations. This proves the presence of an optimal ownership structure threshold below which the ownership structure generates an entrenchment effect on earnings management. However, above this threshold, the ownership structure has an alignment effect. Certainly, these results confirm the theoretical predictions in relation to managerial ownership, governmental ownership, and earnings management (agency, political and development theories, respectively). These results yield important policy implications. It is recommended to set an optimal threshold of ownership structure to control the firm`s managers. This is likely to avoid earnings management.