The Impact of Earning Management on Green Banking Disclosure: The moderating role of Corporate Governance


  • muhammad israr khan israr Abdul Wali Khan University, Mardan
  • Shahzad Khan Abdul Wali Khan University, Mardan
  • Muhammad Ibrahim Khan AWKUM


The aim of the study is to empirically investigate the impact of earning management (EM) on green
banking disclosure (GBD). Furthermore, the current study also aims to assess the moderating role of
corporate governance (CG) structures on the relationship between EM and GBD. (EM) in this study is
measured through an index comprising earning restatements, insider dealing controversies, profit
warnings and accounting controversies. An index consisting of environmental innovation, resource
use and emission index is used to measure the green banking disclosure. (CG) is indexed through
different board characteristics. Due to the possible occurrence of an endogeneity problem, generalized method
of movements’ (GMM) model is applied as a robust technique for mitigating such like endogeneity
between the variables and error term. A panel data of 37 banks from Brazil, Russia, India, China and
South Africa (BRICS) countries for a period from 2009 to 2018 was taken from the DataStream database.
The finding of the study shows a positive impact on GBD suggesting the management entrenchment
motive of the managers. Through the lens of legitimacy theory, it can be concluded that banks involved
in EM are more likely to publish environmental information to dissuade stakeholders’ attention. The
study results indicate that CG moderates the association between EM and GBD. It can be presumed that
CG monitors the opportunistic behavior of managers towards EM by disproportionately disclosing the
green banking initiatives to legitimize their operations and avoid disciplinary actions from stakeholders.
The study has important implications for policymakers, investors, and management. Managers may get
insights by providing precise earning information to the market and various stakeholders (due to
increased awareness) in order to avoid disciplinary actions which may also cause lose their jobs.
Theoretically, the study contribute to the literature as no evidence is available with regard to the relationship
of EM and GBD in BRICS countries.
Keywords: Green banking disclosures, earning management, corporate governance, environmental
innovation, resource use, emissions

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How to Cite

israr, muhammad israr khan, Shahzad Khan, & Muhammad Ibrahim Khan. (2023). The Impact of Earning Management on Green Banking Disclosure: The moderating role of Corporate Governance. CITY UNIVERSITY RESEARCH JOURNAL, 13(1), 77–90. Retrieved from