THE ROLE OF EARNINGS MANAGEMENT IN CAPITAL EROSION

Abstract

The concept of capital preservation is of paramount importance in measuring the performance and financial position of enterprises, so real earnings is the amount that can be distributed without effecting the capital, and therefore is known as " annually distributable income", each enterprise must pay interest, dividends and to creditors, owners and the government taxes (if it operates profitably), so what needed to be determined whether distributable income may cause capital erosion or not (which increases the capital). In this research, the role of earnings management in the capital erosion was discussed, the survey included a sample of companies listed in the Iraq Stock Exchange, the relevant information and data were extracted from the financial data of eleven companies for the period (from 2012 to 2021), and then analyzed and tested according to the statistical analysis program SPSS and Excel, the results show that there is an influential relationship between earnings management and capital erosion, that is to say, earnings management led to capital erosion in the Long term .