The Impact of Board Characteristics on Earnings Quality: An Empirical Study on Companies Listed in the Saudi Stock Market

Document Type : Research article

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Department of Accounting - College of Business - King Khalid University - Abha - Kingdom of Saudi Arabia

Abstract

This study investigates the relationship between board characteristics and earnings quality in non-financial companies listed on the Saudi Stock Exchange. Using panel data from 174 non-financial firms across 17 sectors for the period 2021–2023, the study examines how board size, independence, and activity influence the quality of earnings. The analysis, based on fixed-effects models validated by the Hausman test, reveals that board characteristics have a significant positive impact on earnings quality. Specifically, larger boards with diverse expertise, higher proportions of independent directors, and more frequent meetings are associated with reduced earnings manipulation and improved financial reporting transparency. The findings highlight the critical role of governance mechanisms in fostering earnings quality and suggest practical recommendations to enhance board performance through balanced composition and effective oversight. Future research should address additional factors such as audit quality, incentive of governance reforms under Vision 2030.

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