The Impact of Religiosity on Earnings Quality: International Evidence from the Banking Sector

Abdelsalam, O.; Chantziaras, A.; Omoteso, K.; Ibrahim, M.

doi:10.1016/j.bar.2020.100957

The Impact of Religiosity on Earnings Quality: International Evidence from the Banking Sector

Abdelsalam, O.; Chantziaras, A.; Omoteso, K.; Ibrahim, M.

Authors

Professor Omneya Abdelsalam o.h.abdelsalam@durham.ac.uk
Professor

Dr Antonios Chantziaras antonios.chantziaras@durham.ac.uk
Research Assistant / Associate

K. Omoteso

M. Ibrahim

Abstract

We examine the impact of religiosity on earnings quality, utilising a global sample of 1,283 listed banks headquartered in 39 countries and covering the period 2002–2018. Using instrumental variables two-stage least squares regressions, we demonstrate that religiosity has a significant positive impact on banks’ earnings quality. We further show that the impact of religiosity becomes more pronounced among banks headquartered in countries where religion is an important element of national identity and in countries with weak legal protection. We show that the effects of religiosity are more intense during the global financial crisis period. Overall, these findings support the notion that high religiosity tends to reduce unethical activities by managers and can function as an alternative control mechanism for minimising agency costs. Our empirical investigation is robust to alternative model sample specification.

Citation

Abdelsalam, O., Chantziaras, A., Omoteso, K., & Ibrahim, M. (2021). The Impact of Religiosity on Earnings Quality: International Evidence from the Banking Sector. The British Accounting Review, 53(6), Article 100957. https://doi.org/10.1016/j.bar.2020.100957

Journal Article Type	Article
Acceptance Date	Sep 21, 2020
Online Publication Date	Nov 12, 2021
Publication Date	2021-11
Deposit Date	Sep 22, 2020
Publicly Available Date	Sep 22, 2022
Journal	British Accounting Review
Print ISSN	0890-8389
Publisher	Elsevier
Peer Reviewed	Peer Reviewed
Volume	53
Issue	6
Article Number	100957
DOI	https://doi.org/10.1016/j.bar.2020.100957
Public URL	https://durham-repository.worktribe.com/output/1291774