Author(s): Rahayu Abdul Rahman, Mohd Taufik Mohd Suffian, Erlane K Ghani, Jamaliah Said, Israr Ahmad
This study investigates how managerial ownership affect real earnings management practices in Malaysia. This study uses discretionary expenses to capture real earnings manipulation. Using a sample of 1393 firm-year observations of listed firms, over the investigation period 2006 to 2015, the findings indicate that the degree of real earnings management is positively associated with ownership by management. However, the positive and significant relationship between managerial ownership and real earnings management is weak (strong) for Shariah (non-Shariah) firms. In particular, these relationships are stronger for listed firms that hold non Shariah status. This study contributes to the importance of managerial ownership and religiosity in influencing earnings manipulation among listed firms.