Cuadernos de Economía

ISSN : 0210-0266

Audit Quality and Firm Specific Characteristics impact on Saudi Arabia manufacturing Firms values: Mediating Role of Earning Management

  • Mohammed Abdullah Ammer , Department of Finance, School of Business, King Faisal University, Al-Ahsa 31982, Saudi Arabia.
  • Abdurrahaman Adamu Pantamee , Department of Accounting, University of Nizwa, Oman


Audit Quality, Firm Value, Earning Management, Saudi Arabia, Manufacturing Companies.


The valuation of a firm serves as a pivotal indicator of its financial well-being, thereby guiding stakeholders' decision-making processes. The assurance of financial data reliability through audit quality, coupled with the influence of firm-specific attributes on growth potential and risk management, significantly impacts firm valuation. Concurrently, the structure of corporate governance plays a vital role in bolstering both audit quality and firm-specific characteristics, consequently enhancing firm value. Thus, this empirical inquiry seeks to examine the interplay between audit quality, firm-specific attributes, and the firm value of manufacturing firms in Saudi Arabia, while considering the mediating influence of earnings management. Data spanning from 2014 to 2023, sourced from annual reports and the Saudi Arabia Stock Exchange, were employed for analysis. Employing a longitudinal research design and a quantitative approach, panel data regression analysis was conducted. Findings reveal a positive and statistically significant relationship between audit quality and firm value, as well as firm-specific characteristics and firm value. Moreover, earnings management exhibits a positive and significant impact on firm value, thus serving as a mediator between audit quality, firm-specific characteristics, and firm value among Saudi Arabian manufacturing companies. This substantial mediating effect underscores the study's contribution to the literature, paving the way for further exploration and yielding valuable insights for policymakers and managers regarding the pivotal role of audit quality and firm-specific characteristics in enhancing firm value through effective earnings management strategies.