This paper studies earnings management in Jordan during the global financial crisis. It addresses mainly the question of whether or not financial crisis has an impact on discretionary accruals, using the modified Jones model (1995) for estimating discretionary accruals. By applying Ordinary Least Squares regression model on a sample of 71 nonfinancial listed firms during the period of 2005-2012, I find a conclusive evidence that Jordanian nonfinancial listed firms did not engage in a greater level of earnings management during the financial crisis period. In addition, larger firms are less involved in earnings management practices compared to smaller firms. Moreover, the results suggest a negative significant impact of operating cash flow on discretionary accruals, while it fails to connect current year losses with discretionary accruals. However, the findings indicate that firm’s leverage is positively and significantly associated with discretionary accruals. Overall, the empirical results provided evidence that earnings management practices in Jordanian nonfinancial sectors are relatively small, even smaller in services sector, which raise questions about the validity of the modified Jones model and whether or not different models (such as Deangelo, 1986) should be used in future studies regarding earnings management.

Compensation paid to top executive managers is one of the sensitive areas in modern corporate finance. The objective of this paper is to investigate the determinants of the Chief Executive Officer and/or the Chairman of the board of directors’ cash compensation. It examines mainly the linkage between ownership concentration, role duality, financial performance, among other variables, and executives’ cash compensation for a sample of 81 Jordanian listed firms during the period 2010-2013. By applying fixed and random effects estimates, I find conclusive evidence that dual CEOs receive higher cash compensation, compared to those who do not hold the position of Chairman. In addition, CEOs in larger firms are more compensated than others in smaller ones. The results provided evidence that a firm’s leverage does not affect its CEO’s cash compensation, however, the firm’s industry identity plays some role in determining its executive pay, but not its Chairman of the board. The analysis fails to link CEO cash compensation to the firm’s financial performance and ownership structure, implying that neither compensation contracts nor concentrated ownership structures can alleviate the agency problem or reduce agency costs in Jordanian firms. These results do not diverge much when the dependent variable is the Chairman of the board of directors’ cash compensation. Overall, Jordanian CEOs are unjustifiably over-compensated as they fail to prove their worth, in light of such lamentable performance of the Jordanian non-financial listed firms, which raises questions about executives’ compensations determining mechanism, and the process of hiring CEOs in the first place.