Earnings management in islamic and conventional banks: Does ownership structure matter? Evidence from the MENA region

The aim of this paper is to compare earnings management between conventional and Islamic banks and to examine whether ownership structure affects earnings management in the banking industry of emerging markets. Using a sample of Conventional and Islamic banks from Middle Eastern and North African (MENA) countries, we first found evidence that Islamic bank manage less their earnings than conventional banks. Second, both Islamic and conventional banks with more concentrated ownership use discretionary loan loss provisions to manage their earnings. Third, institutional owners encourage earnings management in Islamic banks and State participation increases earnings management in conventional banks. Finally, family owners reduce this practice in both types of banks.