ESG practices and earnings manipulation activities in banks: evidence from international ESG data

Anis Jarboui, Jamel Chouaibi, Zied Akrout, Salim Chouaibi and Khaireddine Mouakhar
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Anis Jarboui: Université de Sfax - University of Sfax
Jamel Chouaibi: FSEG - Université de Sfax - University of Sfax
Khaireddine Mouakhar: Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School

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Abstract: Using data from international ESG data, we investigate the relationship between ESG practices and earnings manipulation (EM) in the banking sector. Data from 152 listed banks across eight countries were used in the study for the years 2015-2021. Feasible generalised least square (FGLS) models were utilised to examine the relationship between ESG practices and profits quality using secondary data that was obtained from the Refinitiv Eikon database. Finally, to further check the validity of our estimation, we provide a battery of sensitivity analysis by using alternative subsamples and alternative measure of earnings management. The findings indicate a growing interest in ESG over the past decade. Individual social and governance scores have a negative influence on EM while environment score does not have a significant relationship with earnings management. On the other hand, we find that bank ESG combined score is negatively related to EM. Our research offers the information user a vision to had better assess the transparency of the company as well as the quality of the information and its future growth opportunities in a context where the ESG practices occupies a central position in business valuation.

Keywords: Environmental; Social and governance; ESG; Earnings manipulation; EM; Banks (search for similar items in EconPapers)
Date: 2025
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Published in International Journal of Business and Emerging Markets, In press, ⟨10.1504/IJBEM.2027.10066671⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04981327

DOI: 10.1504/IJBEM.2027.10066671

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