THE EFFECT OF AUDIT QUALITY ON THE RELATIONSHIP BETWEEN EARNINGS QUALITY AND SHARE PRICE: EVIDENCE FROM PALESTINE
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Date
2023-08-02
Authors
Ahmad Jehad Alardah
Journal Title
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Publisher
جامعة النجاح الوطنية
Abstract
This study seeks to explore the correlation between earnings quality and share prices within the Palestine Exchange (PEX). It also examines the potential mediating role of audit quality. The sample comprises 40 companies listed on (PEX) over the period spanning 2011 to 2020, totaling 400 observations. Earnings quality was assessed through an analysis that considered factors such as cash flow, net income, and total assets, while share price was determined by referencing the annual closing prices. Similarly, audit quality was quantified by considering auditor size as a crucial indicator. The findings of the investigation reveal that, when accounting for other firm-related variables within the PEX, there is no statistically significant relationship between Earnings Quality (EQ) and Share Price (SP). Additionally, the study did not identify audit quality as a mediator in the link between earnings quality and share prices. These findings will contribute to the development of more accurate and practical methods for evaluating factors that influence share values. The significance of this study lies in its examination of the degree of influence that the Palestinian market wields over earnings and audit quality, substantiated by empirical evidence. This investigation is particularly noteworthy as it represents the pioneering effort to establish a connection between earnings quality and market share prices while shedding light on the potential mediating role of audit quality, exclusively within the Palestinian market
Description
This Thesis is Submitted in Partial Fulfillment of the Requirements for the Degree of Master of Accounting, Faculty of Graduate Studies, An-Najah National University, Nablus, Palestine.