 Impact of Earnings Management on Profitability of Commercial Banks: Evidence from IndiaDeepa Mangala and Neha Singla FIIB Business Review, 2025, vol. 14, issue 3, 367-382 Abstract: This article assesses the impact of earnings management on bank’s current and future financial performance. A bank-specific model, invented by Beatty et al. (2002, Accounting Review , vol. 77, pp. 547–570) and modified by Mangala and Singla (2021; Vision: The Journal of Business Perspective, vol. 25, pp. 159–167), is applied to measure earnings management. Cross-sectional regression is applied to analyse the impact of earnings management on the financial performance of banks for a time period of 7 years (from 2012–2013 to 2018–2019.). The results exhibit that Indian banks actively manage earnings. Earnings management reduces current year’s return on equity, return on assets and net interest margin. Current year’s earnings management also negatively influences following 2 years’ return on equity and net interest margin. Thus, earnings management has major negative implications on banks’ financial performance, not only in the year of earnings management but also in the years to come. In order to curtail earnings management, while examining the financial statements, auditors should be vigilant, and the Reserve Bank of India (the apex regulator) should take punitive actions against such malpractices. Keywords: Earnings management; banks; financial performance; loan loss provision (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:fbbsrw:v:14:y:2025:i:3:p:367-382 DOI: 10.1177/23197145221084037 Access Statistics for this article More articles in FIIB Business Review |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.