This article examines the cost, revenue and profit efficiency levels of 74 banks (47 conventional and 27 Islamic banks) in Gulf Cooperative Council (GCC) countries over the periods 2007 to 2011. The level of efficiencies was measured using Data Envelopment Analysis (DEA) method which applied the intermediation approach. We find that, revenue efficiency seems to play the main factor leading to the lower or higher profit efficiency levels. In essence, the higher revenue efficiency only affects a higher profit efficiency levels in Islamic banks. However, the profit efficiency on conventional banks will not be affect by the higher revenue efficiency levels since the result shows the level of profit efficiency is lower than cost efficiency due to the higher revenue efficiency. In addition, the result of this study also shows that they are statistically significant difference on cost, revenue and profit efficiency between Islamic and conventional banks in GCC countries. The findings of this study are expected to contribute significantly to the existing knowledge on the operating performance of the GCC Islamic and conventional banking sector, bank’s specific management, policy makers and may also facilitate directions for sustainable competitiveness of the GCC Islamic and conventional banking sector operations in the future.

In recent decades, there has been a noticeable increase in the practice of earnings management (EM) as a proxy for financial reporting, especially real activities, with effect on the quality of financial statements. The role of the audit committee in mitigating EM remains ambiguous because of inconclusive findings. Therefore, this study examines the moderating effect of audit quality and audit committee on financial reporting quality, also known as real earnings management in Malaysian companies. The results show that corporate governance mechanism such as financial accounting expert, meeting and indicate significant results with real EM while, audit committee independence and size, shows an insignificant result on real EM. In addition, the results show that audit quality of the audit committee leads to less aggressive EM practice in real activities. The findings also show that audit quality and audit committee has a significant role in restricting the real EM. Audit quality is found to significantly moderate the relationship between audit committee with financial reporting quality proxy. Overall, this study provides a reference point for the relevant parties such as regulatory bodies, policymakers and standard setters towards improving the quality of earnings and corporate governance practices in ensuring credible accounting information.

PurposeThis study aims to investigate the monitoring role of ownership structure (OWS) on real earnings management (REM) practices; previous studies primarily examined the effect of OWS on accrual-based earnings management.Design/methodology/approachThe sample of this study is 490 companies listed on the Malaysian Stock Exchange during the period 2013–2016 (1,960 company-year observations). The regression of a feasible generalized least square was used for data analysis. The authors use three regression models ordinary least squares, panel-corrected standard errors and Driscoll–Kraay standard errors to corroborate the findings and also examine alternative REM measures.FindingsAnalysis of the data shows that family, foreign and institutional ownership has a positive link with the quality of financial reporting and, to a large extent, is capable of alleviating REM. The findings also indicate that some form of OWS significantly affects REM, corroborating existing theories on corporate governance (CG) and the perspectives of practitioners.Practical implicationsThe evidence concerns the significant role played by the OWS in reducing REM activities. The findings are useful in support of regulatory activities, particularly in the design of policies to regulate the OWS. The results may also provide useful insights to inform other policymakers, investors, shareholders and researchers about the active role of family, foreign and institutional investors in monitoring Malaysia's public listed companies (PLCs) to strengthen CG practices. This also leads to less REM and enhances the quality of financial reporting.Originality/valueTo the authors' knowledge, this work is pioneering research from a developing country, specifically from Malaysia, to investigate the manner in which all possible OWSs influence REM. More importantly, the study recommends that regulators and researchers do not envisage OWS as a holistic phenomenon.

Purpose – This paper aims to investigate the efficiency level of Gulf Cooperation Council (GCC) banks on technical efficiency (TE), pure technical efficiency (PTE) and scale efficiency (SE). Both PTE and SE represent the potential factors that influence the efficiency of the GCC banks. In total, 43 GCC banks were observed in this study over the period from 2007 until 2011. Design/methodology/approach – The Data Envelopment Analysis, a non-parametric method using variable returns to scale under Banker, Charnes and Cooper model, was used with assets and deposit (as input) and loan and income (as output). Findings – On average, the results show that many GCC banks are operating within an optimal scale of efficiency. Nevertheless, the results also show managerial inefficiency in the use of resources. Furthermore, the results indicate that, while the larger banks (the 22 largest) tend to operate at constant returns to scale (CRS) or decreasing returns to scale, the smaller banks (the 21 smallest) are susceptible to operate at either CRS or increasing returns to scale. Research limitations/implications – Because of the chosen research method, the results may lack generalisation. Therefore, researchers are encouraged to test the propositions further. An additional implication of the results is that it was able to identify some banks that may become potential targets for outside acquisition. Practical implications – The findings should be useful to banks in the GCC in increasing their efficiencies and recognizing those with a potential for outside acquisition. Originality/value – The findings are valuable because they will facilitate the maintenance of efficient banks in the GCC. This is necessary to enable the countries to maintain a healthy and sustainable economy.

No abstract