Bilal Ahmad Elsalem, Fekri Ali Shawtari, Ahmad Mohammed Qotba, Mohammed Bajaher and Mohammed Asseri
The purpose of this study is to examine both accruals and real earnings management in a large sample of private companies in the UK using data from 2002 to 2009 following the…
Abstract
Purpose
The purpose of this study is to examine both accruals and real earnings management in a large sample of private companies in the UK using data from 2002 to 2009 following the implementation of the UK Act of 2006.
Design/methodology/approach
A panel data analysis using GMM has been adopted to examine the objectives of the study and answer the research questions.
Findings
The results of this study showed that the imposition of the Companies Act of 2006, on its own, did lead to changes in earnings management behaviour, in both accruals-based earnings and real earnings management. Moreover, this study also found that firms that chose to provide IFRS financial statements tended to show less discretionary earnings management, however, it tended to have no impact on real earnings management.
Practical implications
In accordance with the research findings, standard setters with some insight tend to determine how capital markets see the information provided under the legislation such as the UK Act of 2006 in developed countries and thereby ensure long-term sustainability in a modern and sophisticated financial world. This study provides an insight into the successful implementation of the UK act of 2006, and its influence on the aspect of financial reporting.
Originality/value
The novel conclusion reached in the study is that there exists a strong and direct link between the smooth implementation of UK Act of 2006 and the practices of both accruals and real earnings management in real-world business and financial scenarios, particularly, in private companies.
Details
Keywords
Fekri Ali Shawtari, Bilal Ahmad Elsalem, Milad Abdelnabi Salem and Mohamed Eskandar Shah
The financial system plays an essential role in facilitating the intermediation process for economic growth. Policymakers stress on achieving a well-developed and regulated…
Abstract
Purpose
The financial system plays an essential role in facilitating the intermediation process for economic growth. Policymakers stress on achieving a well-developed and regulated financial system to achieve economic development and resiliency. Using data from the State of Qatar, this paper aims to examine the impact of financial development indicator on economic growth; the impact of financial development indicator on hydrocarbon and nonhydrocarbon sector; the impact of Islamic banking on hydrocarbon and nonhydrocarbon economic growth.
Design/methodology/approach
The research uses quarterly data from 2007 to 2019 and adopts autoregressive distributed lag cointegration techniques to test the long- and short-run dynamic relationship between various measures of financial development and economic growth.
Findings
The results present evidence of long-term cointegration between overall financial development indicator and economic growth. Furthermore, the authors document the existence of long-term relationship between financial development and nonhydrocarbon sector. However, there is a lack of evidence on the long-run relationship between financial development and the hydrocarbon sector. Notwithstanding, Islamic banking contributes to overall economic development, as well as to the nonhydrocarbon sector.
Practical implications
This paper offers policymakers with insights to evaluate measures to diversify the economy. It also assists decision-makers in promoting Islamic finance, particularly to the banking sector as a vital contributor to economic growth.
Originality/value
To the best of the author’s knowledge, this paper is the first to evaluate financial development and economic growth for the case of Qatar in light of recent developments in Islamic finance.