Abstract:

The aim of this paper was to examine whether corporate governance (CG) quality affects the information content of discretionary accruals in Saudi Arabia. To approach the concept of CG, which covers such dimensions as the board of directors, its committees, and ownership structure, Data Envelopment Analysis (DEA) was applied to a sample of 124 Saudi firms for the period 2012 to 2016. The findings indicate that the association between stock return and discretionary accruals is greater for firms with a good CG structure. However, this paper was restricted to firms in in Saudi Arabia. Future research should cover other CG countries and compare the results among these countries or examine other moderating variables, such as foreign ownership.