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Earnings management behavior rural banks: The role of moral character based on religiosity

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  • Nurshadrina Kartika Sari
  • Isti Fadah
  • Yuli Hariyati
  • Nurhayati

Abstract

The purpose of the study is the impact of moral character based on religiosity on earnings management behavior through the Theory of Planned Behavior (TPB). This study was conducted in Indonesia Rural Bank. The research method uses a quantitative approach with PLS SEM analysis of data collected from 257 Rural Bank Directors in Indonesia. The main results of the study are the moral character based on religiosity significantly influences earnings management behavior both directly and indirectly through TPB. Despite strong moral character based on religiosity, individuals with expertise in accounting policies may still engage in earnings management. Based on the results obtained conclude that regulatory measures alone are insufficient to curb this behavior, a spiritual approach is essential to reinforce ethical business conduct, emphasizing integrity and honesty. This research concludes that building individual commitment through honesty and integrity must come from personal beliefs, by complying with applicable regulations in preparing financial reports in order to create an ethical and moral business environment. The practical implication of this study is the importance of a spiritual approach that emphasizes the values of integrity and honesty in fostering individual commitment, alongside regulatory measures, to establish an ethical and moral business environment in financial reporting management.

Suggested Citation

  • Nurshadrina Kartika Sari & Isti Fadah & Yuli Hariyati & Nurhayati, 2025. "Earnings management behavior rural banks: The role of moral character based on religiosity," International Journal of Innovative Research and Scientific Studies, Innovative Research Publishing, vol. 8(1), pages 590-598.
    • Handle: RePEc:aac:ijirss:v:8:y:2025:i:1:p:590-598:id:4405
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