Title: Earnings management and ownership type in microfinance institutions: an international evidence

Authors: Naima Lassoued

Addresses: University of Manouba, ESCT, QUARG UR17ES26, Campus Universitaire Manouba, 2010 Manouba, Tunisia

Abstract: The purpose of this paper is to examine whether earnings management in MFIs is motivated by opportunistic behaviour and whether ownership structure could explain this practice. This study is conducted on a sample of 581 MFIs observed over the 2007 to 2015 period. It tests the effect of discretionary provision for loan impairment on future profitability by distinguishing different types of MFIs ownership. The results show that earnings management in MFIs tends to be opportunistic rather than efficient. The type of earnings management differs depending on ownership structure. Indeed, while cooperatives tend more to choose opportunistic earnings management, privately-owned MFIs manage their earnings efficiently. Furthermore, we found inconsistent evidence about earnings management in NGOs.

Keywords: microfinance institutions; MFIs; provision for loan impairment; emerging economies; earnings management; ownership type.

DOI: 10.1504/AAJFA.2023.132962

Afro-Asian Journal of Finance and Accounting, 2023 Vol.13 No.4, pp.528 - 549

Received: 10 Oct 2019
Accepted: 05 Feb 2021
Published online: 22 Aug 2023 *

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