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Earnings management, funding and diversification strategies of banks in Africa

Author

Listed:
  • Mohammed Amidu
  • Ransome Kuipo

Abstract

Purpose - – This paper aims to investigate the implications of earnings management for funding and diversification strategy within the context of developing and emerging economies. Design/methodology/approach - – The authors raise two issues pertinent to bank earnings management: first, whether there is evidence of earnings management of banks in the selected African countries; and second, what must have accounted for the banks to engage in such practices? Findings - – The results show that almost all the 330 banks in the 29 African countries sampled are found to have engaged in some management of their earnings during the period 2002-2009. The authors also find evidence that bank activity mix and funding modes explain bank earnings quality. Overall results indicate that the sensitivity of earnings management to revenue diversification across interest income decreases, as bank market shares increases. Originality/value - – The authors investigate how earnings management is affected by banks intermediation strategies.

Suggested Citation

  • Mohammed Amidu & Ransome Kuipo, 2015. "Earnings management, funding and diversification strategies of banks in Africa," Accounting Research Journal, Emerald Group Publishing Limited, vol. 28(2), pages 172-194, September.
    • Handle: RePEc:eme:arjpps:v:28:y:2015:i:2:p:172-194
    DOI: 10.1108/ARJ-07-2013-0045
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    Citations

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    Cited by:

    1. Yosra Mnif & Imen Slimi, 2023. "Former auditors on the audit committee and earnings management: Evidence from African banks," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 2383-2420, June.
    2. Sarah Anobil Okyere & Vera Fiador & Emmanuel Sarpong‐Kumankoma, 2021. "Earnings management, capital structure, and the role of corporate governance: Evidence from sub‐Saharan Africa," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(6), pages 1525-1538, September.
    3. Ozili, Peterson K, 2019. "Bank Income Smoothing, Institutions and Corruption," MPRA Paper 92339, University Library of Munich, Germany.
    4. Ozili, Peterson K, 2019. "Bank Earnings Management using Commission and Fee Income: the Role of Investor Protection and Economic Fluctuation," MPRA Paper 101824, University Library of Munich, Germany.
    5. Ozili, Peterson K., 2019. "Bank income smoothing, institutions and corruption," Research in International Business and Finance, Elsevier, vol. 49(C), pages 82-99.

    More about this item

    Keywords

    Diversification strategy; Earnings management; Funding modes; G21; M41 N27;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania

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