The Influence of Earnings Management on Earnings Quality and Corporate Sustainability in GCC Companies

Abstract

In the dynamic and evolving economies of the Gulf Cooperation Council (GCC), financial transparency and sustainability have become paramount to long-term development goals. However, the persistent practice of earnings management threatens both the quality of reported earnings and the broader corporate sustainability agenda. This study explores the relationship between earnings management, earnings quality, and corporate sustainability in listed GCC companies. By distinguishing between accrual-based and real earnings manipulation techniques, we assess their impact on earnings informativeness, reliability, and long-term strategic performance. The findings reveal that excessive earnings management undermines earnings quality, distorts financial signals to stakeholders, and detracts from environmental, social, and governance (ESG) commitments. The paper calls for stronger governance mechanisms and harmonized regulatory frameworks to promote sustainable financial reporting across the region.