Corporate governance code and earnings management in an emerging market: longitudinal evidence from Kuwait

Purpose This study aims to examine whether the implementation of the corporate governance code (CGC) improved earnings quality in Kuwait. Design/methodology/approach Using non-financial firms listed on the Kuwait Stock Exchange from 2000 to 2024, this study measures accrual-based earnings management (EM) through discretionary accrual volatility estimated using a modified Dechow–Dichev model. Findings Firm fixed-effects regressions show a significant decline in EM following CGC implementation. A dynamic event-study specification reveals no pre-reform trends and a persistent post-reform reduction, while a placebo reform test yields null effects. The findings are robust to alternative discretionary accrual proxies, heterogeneity analyses using auditor type and firm size and entropy balancing. Practical implications The results suggest that the CGC reduces EM. Therefore, regulators and policymakers should strengthen corporate governance (CG) practices to enhance financial reporting quality and investor confidence. Originality/value This study contributes to the limited literature on CG and EM by providing rare long-horizon evidence from Kuwait, an underexplored emerging market. Using a 24-year data set, it evaluates the effectiveness of a comprehensive governance mandate in a context where EM is often argued to be more prevalent.