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Entrepreneurship and Sustainability Issues Open access
Journal Impact FactorTM (2025) 1.5 Q3
Journal Citation IndicatorTM (2025) 0.25 Q4
Received: 2026-03-11  |  Accepted: 2026-04-26  |  Published: 2026-06-30

Title

The relationship between risk-taking and firm value: does earnings management matter? Evidence from an emerging context


Abstract

This study examines the effect of risk taking on firm value as well as the effect of risk taking on earnings management in Saudi Arabia. In addition, this study investigates the moderating effect of earnings management on the relationship between risk taking and firm value. We analyzed a sample of nonfinancial firms listed in the Saudi Stock Exchange (Tadawul). The study sample consists of 1008 firm-years observations during the period from 2008 to 2019. The results showed that risk-taking activities are positively valued by market participants and correlated with higher earnings management. In addition, the results indicated that earnings management moderates the positive relationship between risk taking and firm value. These findings are important for business organizations which should be aware that more opaque financial information, higher information asymmetry and lower firm value are likely to be the outcomes when managers engage in risky investment decisions. Governments and regulators should not ignore the negative implications of risk taking that require strengthening firms’ oversight and corporate governance mechanisms.


Keywords

business risk, firm value, earnings management, emerging markets, Saudi Arabia


JEL classifications

G10 , G12 , G17


URI

http://jssidoi.org/jesi/article/6661


DOI


Pages

381-394


Funding

The authors extend their appreciation to the Deanship of Postgraduate Studies and Scientific Research at Majmaah University for funding this research work through the project number (R-2026-154).

This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License

Authors

Abd, Saleh Ali El
Majmaah University, Al Majma'ah, Saudi Arabia https://www.mu.edu.sa
Articles by this author in: CrossRef |  Google Scholar

Eissa, Aref M.
Majmaah University, Al Majma'ah, Saudi Arabia https://www.mu.edu.sa
Cairo University, Giza, Egypt https://cu.edu.eg
Articles by this author in: CrossRef |  Google Scholar

Diab, Ahmed
Prince Sultan University, Riyadh, Saudi Arabia https://www.psu.edu.sa
Articles by this author in: CrossRef |  Google Scholar

Journal title

Entrepreneurship and Sustainability Issues

Volume

13


Number

4


Issue date

June 2026


Issue DOI


ISSN

ISSN 2345-0282 (online)


Publisher

VšĮ Entrepreneurship and Sustainability Center, Vilnius, Lithuania

Cited

Google Scholar

Article views & downloads

HTML views: 575  |  PDF downloads: 498

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