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The influence of earnings management and bank structure on bank performance: International evidence

Nacasius U. Ujah (Department of Economics, South Dakota State University, Brookings, South Dakota, USA)
Jorge Brusa (Texas A&M International University, Laredo, Texas, USA)
Collins E. Okafor (North Carolina Agricultural and Technical State University, Greensboro, North Carolina, USA)

Managerial Finance

ISSN: 0307-4358

Article publication date: 10 July 2017




The purpose of this paper is to examine the influence of bank structure and earnings management on bank performance in international markets. Specifically, the authors empirically examine non-foreign banks in the following emerging countries: Brazil, China, India, Mexico, Nigeria, Russia, and South Africa.


A review of loan loss portfolio and bank’s power structure is examined to formulate testable conjectures. The authors used data collected from Bankscope for the aforementioned countries. The data range is from 1997 to 2009.


The results suggest that: first, bank market structure and earnings management have a significantly negative influence on bank performance. Second, the negative influence is more pronounced in banks with higher level of concentration and earnings management.

Practical implications

The evidence suggest that banks with monopoly power have a greater incentive to establish lending relationships, and monopoly enhancing regulation in the financial sector at the time of the Civil War contributed to industrialization in the USA. The evidence in the emerging market suggest that monopoly power (bank structure) and propensity to manage earnings leads to lower bank performance. As such, helping bankers in understanding the effect of their bank structure in relation to their performance.


To the author’s knowledge, this is the first study that explores the determinants of managed earnings and bank structure on bank performance in emerging markets.



Ujah, N.U., Brusa, J. and Okafor, C.E. (2017), "The influence of earnings management and bank structure on bank performance: International evidence", Managerial Finance, Vol. 43 No. 7, pp. 761-773.



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