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Earnings management around Islamic bonds issuance

Author

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  • Abdul Halim, Zairihan
  • Xu, Suichen
  • Abdul Majid, Norakma

Abstract

We examine whether the religious values underlying Islamic bonds influence issuers’ financial reporting behavior. Using a sample of 1316 sukuk tranches issued by publicly listed firms in Malaysia from 2001 to 2014, we find sukuk issuers overstate their earnings in the year preceding sukuk offerings, and in the year subsequent to the offering. We also examine the influence of religious values associated with the parties involved in sukuk issuance on issuers’ earnings management. Our results show that a Muslim-dominated board is associated with less earnings management, supporting the idea of Islamic business ethics.

Suggested Citation

  • Abdul Halim, Zairihan & Xu, Suichen & Abdul Majid, Norakma, 2020. "Earnings management around Islamic bonds issuance," The Quarterly Review of Economics and Finance, Elsevier, vol. 77(C), pages 195-205.
    • Handle: RePEc:eee:quaeco:v:77:y:2020:i:c:p:195-205
    DOI: 10.1016/j.qref.2020.03.003
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    More about this item

    Keywords

    Earnings management; Real activities manipulation; Sukuk; Securitization; Religious value;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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