Impact of Accrual Earnings on Shariah Compliant Firms Performance

Abstract

This study has focused on identifying the impact of accrual earnings management on financial performance of Shariah compliant firms in Pakistan. In this study, accrual earnings management has been considered as independent variable. Whereas, return on assets, return on equity, earnings per share, and price to earnings ratio has been considered as dependent variables. However, this study has finalized shariah compliant firms in Pakistan to testify the relationship between accrual earnings management and financial performance. Secondary sources of data (annual financial statements) have been used for data collection regarding variables of this study from the period of 2010 – 2017. A sample size of 225 firms has been finalized to represent the entire population. Collected data has then been analyzed through statistical instruments such as correlation and regression by using Stata. Based on the findings, it has been concluded that accrual earnings management has significant impact on return on assets and return on equity. Whereas, accrual earnings management has insignificant impact on earnings per share and price to earnings of Shariah compliant firms in Pakistan