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The Effect of Board Characteristics on Real Activities Manipulation in Tunisian Banks

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Listed:
  • Amina Zgarni
  • Hassouna Fedhila

Abstract

The succession of financial scandals and resounding bank failures that characterized the economic environment over the past three decades have given more weight to governance mechanisms. As such, considered to be one of the most important internal governance mechanisms, the board of directors has shown its strengths in controlling earnings manipulation, in particular those linked to real activities. The aim of this paper is to examine the effect of board characteristics on real earnings management. Using panel data econometrics, on all Tunisian commercial banks over the period 2008-2019, we show that board gender diversity has a disciplinary role in real earnings management as measured by discretionary revenue on equity securities. However, we show that board independence increases the real earnings management. As for board size, board duality, as well as the number of meetings carried out per year by the board of directors, we prove that they have no significant effect on real earnings management.

Suggested Citation

  • Amina Zgarni & Hassouna Fedhila, 2022. "The Effect of Board Characteristics on Real Activities Manipulation in Tunisian Banks," Asian Social Science, Canadian Center of Science and Education, vol. 18(1), pages 1-47, January.
    • Handle: RePEc:ibn:assjnl:v:18:y:2021:i:1:p:47
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    References listed on IDEAS

    as
    1. Mohamed Khalil & Aydin Ozkan, 2016. "Board Independence, Audit Quality and Earnings Management: Evidence from Egypt," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 15(1), pages 84-118, April.
    2. Beatty, A & Chamberlain, Sl & Magliolo, J, 1995. "Managing Financial Reports Of Commercial-Banks - The Influence Of Taxes, Regulatory Capital, And Earnings," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 33(2), pages 231-261.
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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