Earnings Management in Banks: Empirical Evidence from India
Journal Title: International Journal of Accounting and Financial Management Research (IJAFMR) - Year 2019, Vol 9, Issue 1
Abstract
This research work investigates the existence of earning management practices in Indian banks, specifically those belong to public and private sectors. Public sector banks are perceived to be more sensitive towards the different pressures of capital market, resultantly their share prices are more influenced by the reported earnings. Therefore, people expect that banks those belong to public sectors are more indulged in the earning management practices in comparison to its counterpart (private sector banks). This research work measures earnings management thorough discretionary loss loan provisions. Based on the sample of 30 Indian banks spanning over 8 years from 2010 to 2017, we find that, on average, public companies are less likely to be engaged in earnings management consistent with the prediction of analysts coverage and regulations hypothesis. We use profitability ratios, as a control variable to ensure that our results are not driven due to fundamental differences between private and public banks. Contrary to the earlier studies where the focus was only earning management in banks of public sector, results mentioned in this study expand the existing body of knowledge, by providing results to the private sector banks& public sector bank. These provided results help us to understand the magnitude and forms of earning management at the private sector& public sector banks of India.
Authors and Affiliations
K. Balanaga Gurunathan, Bhawna Choudhary
Keywords
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- EP ID EP603236
- DOI 10.24247/ ijafmrjun20192
- Views 123
- Downloads 0
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