Are Investors in Amman Stock Exchange Able to Detect Earnings’ Manipulation?

The purpose of this study is to examine investors’ awareness in Amman Stock Exchange of the effects of earnings manipulation incentives on the earnings manipulation practices of managements through the usage of the available level of flexibility in the accounting standards, and to examine whether those investors are able to detect these practices. A self‐administered questionnaire of three sections was developed and used to achieve the purposes of this study. A sample of 144 respondents from four industries was selected using a stratified sampling method. The study found that investors in Amman Stock Exchange have enough awareness to the effects of earnings manipulation incentives on the practices of managements toward the manipulation of earnings. Moreover, this study concluded that investors in Amman Stock Exchange have the ability to detect those practices.