A Conceptual Paper: Islamic Corporate Governance and Earnings Management

Authors

  • Winarsih Universitas Islam Sultan Agung, Semarang, Indonesia
  • Maya Indriastuti Universitas Islam Sultan Agung, Semarang, Indonesia
  • Ahmad Hijri Alfian Universitas Islam Sultan Agung, Semarang, Indonesia

Abstract

Earnings management is a theme that is still interesting to research today. This is because earnings management is able to provide an overview of managers' behavior in reporting their business activities in a certain period, namely the possibility of the emergence of certain motivations that encourage them to manage or to arrange the reported financial data. This study will examine the Islamic corporate governance of earnings management with a target sample consisting of 65 annual reports of Islamic banks in Indonesia from 2018 to 2022 and be analyze by using panel data regression analysis. This research contributes to the literature on earnings management practices by looking at the extent to which Islamic banks in Indonesia take their controlling market expectations and keeping stock prices high

References

Adams, S., & Scott, M. (1996). Scott Adams. Business Ethics: The Magazine of Corporate Responsibility. https://doi.org/10.5840/bemag199610473

Almutairi, A.R. & Quttainah, M.A. (2017). Corporate governance: evidence from sharia banks. Social Responsibility Journal, 13(3), 601-624. https://doi.org/10.1108/SRJ-05-2016-0061

Bank Indonesia Regulation No. 11/3/PBI/2009 concerning Sharia Commercial Bank.

Buallay, A. (2019). Corporate governance, sharia’ah governance and performance: a cross-country comparison in MENA region. International Journal of Sharia and Middle Eastern Finance and Management, 12(2), 216-235. https://doi.org/10.1108/IMEFM-07-2017-0172.

Chaity, N.S. & Islam, K.M.Z. (2022). Bank efficiency and practice of earnings management: a study on listed commercial banks of Bangladesh. Asian Journal of Accounting Research, 7(2), 114-128. https://doi.org/10.1108/AJAR-09-2020-0080

Elghuweel, M.I., Ntim, C.G., Opong, K.K. and Avison, L. (2017). Corporate governance, Islamic governance and earnings management in Oman: A new empirical insights from a behavioural theoretical framework. Journal of Accounting in Emerging Economies, 7(2), 190-224. https://doi.org/10.1108/JAEE-09-2015-0064

Elnahass, M., Tahir, M., Abdul Rahman Ahmed, N. and Salama, A. (2023). Internal governance mechanisms and information value of banks’ earnings. Journal of Accounting in Emerging Economies. https://doi.org/10.1108/JAEE-09-2020-0247

Fitri, V. & Siswantoro, D. (2022). Can corporate governance mechanisms reduce earnings-management practices in Islamic banks?. Journal of Islamic Accounting and Business Research, 13(1), 16-31. https://doi.org/10.1108/JIABR-04-2019-0081

Ermawati, L., & Anggraini, N. (2020). Pengaruh Komisaris Independen dan Dewan Pengawas Syariah Terhdadap Manajemen Laba ( Studi Pada Bank Umum Syariah Di Indonesia). Jurnal Akuntansi dan Keuangan Islam, 01(01), 61–70.

Financial Services Authority Regulation No. 33/POJK.04/2014 concerning on the Board of Directors and the Board of Commissioners of Listed Companies or Public Companies.

Financial Services Authority Regulation No. 30/POJK.05/2014 concerning Good Corporate Governance for Financing Companies.

Financial Services Authority Regulation No. 55/POJK.04/2015 concerning on the Establishment and Work Implementation Guidelines for the Audit Committee.

Financial Services Authority Regulation No. 57/POJK.04/2017 concerning on the Implementation of Good Corporate Governance for Securities Companies Conducting Business as Underwriters and Broker-Dealers.

Harun, M.S., Hussainey, K., Mohd Kharuddin, K.A. and Farooque, O.A. (2020). CSR disclosure, corporate governance and firm value: a study on GCC sharia banks. International Journal of Accounting & Information Management, 28(4), 607-638. https://doi.org/10.1108/IJAIM-08-2019-0103

IFSB (2009), Guiding principles on sharia governance systems for institutions offering sharia financial services, sharia financial services board. www.isfb.org

Jensen, M., & Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. In The Economic Nature of the Firm: A Reader, Third Edition. https://doi.org/10.1017/CBO9780511817410.023

Khalil, A. & Boulila Taktak, N. (2020).The impact of the shariah board’s characteristics on the financial soundness of sharia banks. Journal of Sharia Accounting and Business Research, 11(9), 1807-1825. https://doi.org/10.1108/JIABR-08-2018-0127

Khan, I., Zahid, S.N. and Akhtar, T. (2018). Shari’ah governance and sharia banks performance: evidence from South Asia. South Asian Journal of Management Sciences, 12(2), 173-187. http://dx.doi.org/10.21621/sajms.2018122.04

Khan, Imran & Zahid, Syeda Nitasha. (2020). The impact of shari’ah and corporate governance on sharia banks performance: evidence from Asia. International Journal of Shariaand Middle Eastern Finance and Management, 13(3), 483-501. doi: 10.1108/IMEFM-01-2019-0003

Kolsi, M.C. & Grassa, R. (2017). Did corporate governance mechanisms affect earnings management? Further evidence from GCC Islamic banks". International Journal of Islamic and Middle Eastern Finance and Management, 10(1), 2-23. https://doi.org/10.1108/IMEFM-07-2015-0076

Lassoued, M. (2018), Corporate governance and financial stability in sharia banking. Managerial Finance, 44(5), 524-539. https://doi.org/10.1108/MF-12-2016-0370

Lu, Y., Abeysekera, I. and Cortese, C. (2015). Corporate social responsibility reporting quality, board characteristics and corporate social reputation: evidence from China. Pacific Accounting Review, 27(1), 95-118. https://doi.org/10.1108/PAR-10-2012-0053

Mersni, H. & Ben Othman, H. (2016). The impact of corporate governance mechanisms on earnings management in Islamic banks in the Middle East region. Journal of Islamic Accounting and Business Research, 7(4), 318-348. https://doi.org/10.1108/JIABR-11-2014-0039

Mahrani, M., & Soewarno, N. (2018). The effect of good corporate governance mechanism and corporate social responsibility on financial performance with earnings management as mediating variable. Asian Journal of Accounting Research. https://doi.org/10.1108/ajar-06-2018-0008

Neves, M.E., Proença, C. and Cancela, B. (2023). Governance and social responsibility: what factors impact corporate performance in a small banking-oriented country?. International Journal of Accounting & Information Management, 31(1), 66-92. https://doi.org/10.1108/IJAIM-08-2022-0166

Neves, M.E., Santos, A., Proença, C. and Pinho, C. (2022). The influence of corporate governance and corporate social responsibility on corporate performance: an Iberian panel data evidence, EuroMed Journal of Business. https://doi.org/10.1108/EMJB-01-2022-0002

Novitasari, T., Hisamuddin, N., & Maharani, B. (2019). Pengaruh Tata Kelola Perusahaan dan Kualitas Auditor terhadap Manajemen Laba pada Bank Umum Syariah di Indonesia. Jurnal Ekonomi Akuntansi dan Manajemen, 18(2), 85. https://doi.org/10.19184/jeam.v18i2.12410

Rahmadani, S., & Haryanto, H. (2018). Manajemen Laba: Peran Keaktifan Komite Audit dan Auditor Eksternal Big Four (Studi Empiris Pada Perusahaan Manufaktur Yang Terdaftar Di BEI 2013-2015). Jurnal Akuntansi Aktual, 5(1), 46–62. https://doi.org/10.17977/um004v5i12018p046

Rini, N. (2019). The Implementation of Islamic Corporate Governance (ICG) on Sharia Banking in Indonesia. TIJAB (The International Journal of Applied Business), 2(1), 29. https://doi.org/10.20473/tijab.v2.i1.2018.29-38

Rezaee, Z. & Safarzadeh, M.H. (2023). Corporate governance and earnings quality: the behavioral theory of corporate governance (evidence from Iran). Corporate Governance, 23(1), 189-218. https://doi.org/10.1108/CG-08-2021-0289

Scott, William R. (2015), Financial Accounting Theory, 7th Edition, Canada : Pearson Education Limited.

Suryanto, T. (2017). Manajemen Laba Pada Bank Syariah Di Indonesia: Peran Komite Audit dan Dewan Pengawas Syariah. Kinerja, 18(1), 90. https://doi.org/10.24002/kinerja.v18i1.520

Tanjung, M. (2020). A cross-firm analysis of corporate governance compliance and performance in Indonesia. Managerial Auditing Journal, 35(5), 621-643. https://doi.org/10.1108/MAJ-06-2019-2328

Widyaningsih, H. (2017). Pengaruh Corporate Governance Terhadap Manajemen Laba. Nominal, Barometer Riset Akuntansi dan Manajemen, 6(2). https://doi.org/10.21831/nominal.v6i2.16652

www.cnn.com

Zhang, Y., Chong, G. and Jia, R. (2020). Fair value, corporate governance, social responsibility disclosure and banks’ performance. Review of Accounting and Finance, 19(1), 30-47. https://doi.org/10.1108/RAF-01-2018-0016

Downloads

Published

2024-03-16

How to Cite

Winarsih, Indriastuti, M., & Alfian, A. H. (2024). A Conceptual Paper: Islamic Corporate Governance and Earnings Management. Proceedings of Femfest International Conference on Economics, Management, and Business, 2, 386–394. Retrieved from https://ejournal.unida.gontor.ac.id/index.php/FICCOMSS/article/view/11814