The Impact of Accrual-based Earnings Management on Cash Holdings: Applied Study in Listed Banks in Damascus Securities Exchange

This study examines the association between accrual-based earnings management and cash holding behavior in a constrained banking environment, using evidence from private banks listed on the Damascus Securities Exchange. Instead of assuming a direct causal effect, discretionary loan loss provisions (DLLPs) are conceptualized as a regulatory and reporting instrument through which banks may manage capital pressures, liquidity buffers, and supervisory expectations, particularly under limited institutional enforcement. Using quarterly panel data for 11 conventional banks over 2011–2022, the analysis employs panel regression techniques with heteroskedasticity-robust standard errors. The results show that DLLPs are economically positively associated with cash holdings, but the effect is not statistically significant, indicating that no robust inference can be drawn regarding a causal impact. In contrast, IFRS 9 adoption demonstrates a statistically significant positive association with cash buffers, suggesting that expected credit loss frameworks influence liquidity management incentives. The study provides context-specific evidence on the interaction between accounting discretion and liquidity policies under regulatory pressure, without claiming a universal causal mechanism. These findings are relevant for regulators and policymakers in emerging markets aiming to evaluate the behavioral implications of provisioning standards and liquidity oversight