Identifying and Ranking of Interventional and Contextual Conditions and Consequences of Earning Management in Banking Industry of Iran

The prevalence and powerful consequencesof earning management, the decisive role of banks in the economy of eachcountry and their operational function in the field of accounting and financialreporting allow accounting studies to survey banking industry. Due to the lackof qualitative studies, the paper aims to identify and rank interventional andcontextual conditions and consequences of earning management in this industry.

The methodology of research is FuzzyDelphi and Fuzzy Analytical Hierarchy Process using an interview and aquestionnaire. Using snowball sampling, 15 experts in this industry wereinterviewed. Then the questionnaires of Delphi and pairwise comparisons weregiven to 23 people participated in the preparation, analysis and auditing offinancial statements of the banks. The time domain of this study is 2019 and2020. 

The effective interventionalconditions on earning management in the banking industry are as follows, respectively: "Economic environment pressure", "Factors involved in the level of financial transparency", "Industry-specific factors," and "Legal environment factors"; also, contextual conditions involve "economic", "cultural", "regulatory/legal" and "industry-specific" contexts, respectively. Furthermore, the consequences of this phenomenon are as follows, respectively: "Distortion of Financial Reporting", "SocialConsequences", "Economic and Monetary Market Consequences", and "Consequences of Impact on the Capital Market".

Becoming a culture of profit payment, bank survival motivation, special management motivation, quality of accountingstandards and legal motivation are the main conditions affecting the earningmanagement; also, its main consequences are accumulation of toxic assets, systematic corruption, sharp rise in inflation, and the increased informationasymmetry. Contribution: In addition to developing literatureand related theories, these findings can be useful for investors, The CentralBank, standard setters, inspectorates and auditors.