The Influence of Enterprise Resource Planning System Implementation on Accrual-Based Earnings Management: Empirical Evidence from Jordan

Abstract

This research provides evidence on whether enterprise resource planning (ERP) implementation affects accrual-based earnings management (AEM) in the service and manufacturing firms listed on the Amman Stock Exchange (ASE). The Huber–White’s sandwich estimator for pooled ordinary least squares (OLS) regression was utilized for this investigation as the primary statistical technique. Using three different AEM models and a sample of 390 firm-year observations for the period spanning from 2015 to 2019, this study reveals a significant and negative nexus between ERP implementation and AEM. The findings show that ERP adopting firms are less likely to engage in AEM practices than ERP non-adopting firms. In terms of contribution, the present research is considered among the first to investigate the impact of ERP system adoption on earnings management (EM) in Jordan.