The Impact of Earnings Management Strategies on Accounting Information Relevance
Dr. Salah Ahmed ORABY

Abstract
This research aims to investigate the impact of earnings management strategies on accounting information relevance with the application to listed companies in Saudi stock exchange during the period from 2012 to 2016 using the balanced panel data methodology with a sample of 113 companies. Results indicate that earnings per share are of value relevance and that is a necessary condition and assumption to carry out this study. Results indicate that accounting accrual- based earnings management strategy is used to manipulate earnings downward but it is not of value relevance because it has no effects on share prices. On the other hand, real activities-based earnings management strategy is statistically significant and of value relevance and it is used to manipulate net income upward. Managers engage in real activities-based earnings management practices to increase net income but investors in Saudi capital market understand these practices and adjust for their decisions by reducing the value relevance of earnings when determining share prices. Low adjusted R squared of 0.11 requires interpretation of our results with caution.

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