The effect of accounting practices on bankruptcy risk: evidence from MENA countries

Anas Ghazalat

International Journal of Management Practice, 2024, vol. 17, issue 3, 329-355

Abstract: This study emphasises the importance of researching the interaction effect of using earning management, accounting-conservatism, and tax-shelter over bankruptcy-risk in essentially unfamiliar, emerging markets and non-Western nations. The study analyses data of a sample of 4,878 observations covering the non-financial firms listed in the MENA countries in the period from 2011 until 2019. The results of the robust regression document indicate that earning management practice and tax-shelter proxy play a significant role in increasing the opportunity of bankruptcy risk. In contrast, high accounting conservatism practices were associated with a low level of bankruptcy risk. The nature of accounting practices differs as a result of the heading purpose of these practices which are associated with agency costs and management perspective, hence the effect on bankruptcy risk. These findings contribute to the evidence that the combination of various accounting theories (agency; positive and bankruptcy) will explain the effect of accounting practices on bankruptcy risk.

Keywords: bankruptcy risk; accruals; discretionary accruals; tax-shelter; MENA countries. (search for similar items in EconPapers)
Date: 2024
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