Stakeholders’ perceptions on earnings management motivations and techniques in Libyan commercial banks

Yasser Barghathi

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The issue of earnings management has continued to be problematic in
the financial reporting context. It has proved to be an important topic that concerns
a wide range of stakeholders including regulators, investors and preparers. This
paper examines the perceptions of Libyan Commercial Banks' (LCBs) stakeholders
regarding earnings management (EM) motivations and techniques. The paper
reports on a questionnaire survey of stakeholders which yielded 102 Responses
(response rate 53%). It is found that LCBs’ managers are engaged in EM practices
as a result of a number of motivations. In consistent with accounting literature on
EM, LCBs’ managers tend to use Loan Loss Provision LLP as well as other
techniques to manage their earnings. However, the research finding reveal some
other “techniques” that are being used for EM. Some of them clearly lay out of
GAAP and law framework which may be seen as an explicit breach to bank
managers’ accountability. The importance of the banking sector for society has
been amply demonstrated in recent years. The evidence provided by the
questionnaire results refer to a serious problem to the accountability of LCBs’
managers. The existence of these motivations, which appear to be unavoidable, put
pressure on the accountability process and expose it to a lack of trust and disrepute
which therefore may have an adverse effect on the relationship between LCBs’
managers and their stakeholders. LCBs’ manager should be free from such
motivations in order to produce unbiased and fair accounting information.
Original languageEnglish
Pages (from-to)344-368
JournalJournal of Accounting and Management Information Systems
Issue number3
Publication statusPublished - 2017


  • earnings management, EM motivations, EM techniques, stakeholders, banks, perceptions.


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