Abstract
This study investigates the impact of corporate governance index and earnings management on firms’ performance
and makes a comparative analysis of the selected Islamic and
conventional financial institutions in Pakistan for the period of
2005-2015. Data of 20 KSE listed Islamic financial institutions (i.e.,
a few Islamic banks and mostly mud.
¯arabah companies), and 35 KSE
listed conventional financial institutions (i.e., conventional banks,
mutual funds, insurance companies, and investment companies)
have been used for analysis. The fixed effect model and random
effect model have been used for analysis. The study finds that the
corporate governance structure of conventional financial institutions
is sound as compared to Islamic financial institutions. The study
also concluded that the manipulation for earnings management is
less in Islamic financial institutions as compared to conventional
financial institutions in Pakistan. Therefore, it does not affect firm’s
performance of Islamic financial institutions whereas the results of
conventional financial institutions indicate that the manipulation of
earnings management has an impact on their performance. Results
of this study suggest that compliance with corporate governance
practices is equally significant for both Islamic and conventional
financial institutions.
Saira Ashfaq, Ghulam Mujtaba Kayani, Muhammad Ali Saeed. (2017) The Impact of Corporate Governance Index and Earnings Management on Firms’ Performance: A Comparative Study on the Islamic Versus Conventional Financial Institutions in Pakistan, Journal of Islamic Business and Management, Volume 7, Issue 1.
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