The effects of IFRS 9 on Earnings Management in the Egyptian Banking Industry

Abstract

This paper examines whether the adoption of the International Financial Reporting Standard 9 (IFRS 9), Financial Instruments, can restrict the use of loan loss provisions (LLP) to engage in earnings management and capital management by Egyptian banks. Using a sample of 27 operating Egyptian banks from 2017 to 2020, I find a decrease in LLP after the adoption of IFRS 9, suggesting that IFRS 9 limits the use of LLP for earnings management purposes. But I do not find evidence of different use of LLP between pre- and post-IFRS 9 adoption periods. I fail to document that there is a significant difference in the usage of LLP between public and private Egyptian banks. The contribution of this paper is to document the effect of IFRS 9 on the use of LLP in Egyptian banks.