Financial reporting quality and earnings management in Libyan banks: Stakeholders’ perceptions

This paper ascertains the perceptions of Libyan Commercial Banks' (LCBs) stakeholders in regards to the financial reporting quality through the existence of earning management. This approach to detect for earnings management has been widely adopted by academic and therefore it could be referred to as an academic approach. A total of useable 102 questionnaires from a range of LCB stakeholders comprising preparers of financial statements, users, regulators and academics have analysed to answer the research questions. Earnings management behaviour is viewed as having a place in LCBs' financial reporting due to the existence of a range of factors. Stakeholder groups agreed, on balance, that such behaviour does exist because of local accounting practices, weak external auditor, and poor corporate governance leading to the assumption that financial reporting of LCBs implies managed earnings which eventually suggest that LCBs' financial reporting would have been of less quality given the existence of the factors that may facilitate such behaviour.