The Impact of Financial Leverage and Capital Adequacy on the Earnings Quality in Jordanian Commercial Banks

The study aimed to determine the impact of financial leverage and capital adequacy on the earnings quality in Jordanian commercial banks, where leverage is represented by the ratio of total debts to total assets, while the capital adequacy ratio was obtained from the published annual reports of Jordanian commercial banks during the period from (2018 - 2022), whereas capital adequacy ratio dignified through the formula CAR = (Tier 1 Capital + Tier 2 Capital) / Risk-Weighted Assets while the earnings quality was calculated according to the company's net cash from operating activities dividing by its net income. The study applied a descriptive analytical approach and the study population was represented by all (12) Jordanian commercial banks. After conducting the necessary financial and statistical analysis for the study, it was concluded that there is an impact of financial leverage and capital adequacy on the earnings quality in Jordanian commercial banks and that financial leverage and capital adequacy contributed to explaining 10% of the variation that occurred in the earnings quality in Jordanian commercial banks. The study recommended that commercial banks should focus on choosing techniques and ratios of financing the commercial bank to achieve the goal of improving the bank's earnings quality, and the importance of conducting future studies aimed at examining the factors that support the earnings quality.