Given the growing importance of financial reporting quality and its role in enhancing economic transparency, this study aims to determine the relationship between corporate governance and earnings management, considering the role of macroeconomic indicators in the Persian Gulf countries The structural and institutional differences among these countries provide a suitable context for analyzing the impact of economic and institutional variables on earnings management behavior.
To achieve the research objective, seven developing economic environments-namely Iran, Saudi Arabia, the United Arab Emirates, Kuwait, Oman, Qatar, and Bahrain—were examined. The study period covers the years 2014–2024 for Iran (in the Iranian calendar) and 2015–2023 for the other countries. The hypotheses were tested using multivariate regression analysis.
The results indicate that the impact of corporate governance on earnings management varies across the Gulf countries and Iran. In Iran and Qatar, corporate governance has led to an increase in earnings management, whereas in Saudi Arabia, the UAE, Kuwait, and Bahrain, it has resulted in a decrease. In Oman, no significant effect was observed. Additionally, inflation has strengthened this relationship in Iran but had no effect in the other countries. Economic growth influenced the relationship only in Saudi Arabia, and oil prices played a role only in Kuwait and Oman.
These results suggest that economic, and structural factors play a significant role in the observed differences. The findings of this study, by emphasizing the importance of the institutional environment and macroeconomic indicators, highlight the need for context-based analyses in examining financial relationships.