Earnings management behaviors under different monitoring mechanisms: The case of Islamic and conventional banks

Omneya Abdelsalam, Panagiotis Dimitropoulos, Marwa Elnahass and Stergios Leventis

Journal of Economic Behavior & Organization, 2016, vol. 132, issue S, 155-173

Abstract: We investigate the impact of organizational religiosity on the earnings quality of listed banks in the Middle East and North Africa region. We analyze Islamic banking institutions, which operate within strict religious norms and extended accountability constraints, and compare them with their conventional counterparts during 2008–2013. We find that Islamic banks are less likely to manage earnings and that they adopt more conservative accounting policies. Based on these findings, we argue that religious norms and moral accountability constraints in these organizations have a significant impact on financial reporting quality and agency costs, which have implications for both regulators and market participants.

Keywords: Financial reporting quality; Earnings management; Conservatism; Islamic banks; MENA countries; Agency costs (search for similar items in EconPapers)
JEL-codes: G15 G21 G28 M41 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (48)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:132:y:2016:i:s:p:155-173

DOI: 10.1016/j.jebo.2016.04.022

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