In this article, we examine whether Islamic banks are less likely to manage their earnings than non-Islamic banks and how Islamic banks' unique corporate governance system, especially Shari'ah Supervisory Boards, impacts earnings management behaviors within Islamic banks. Using a sample of Islamic banks and their matched non-Islamic banks in 15 countries, we find that, first, Islamic banks are less likely to conduct earnings management as measured by both earnings loss avoidance and abnormal loan loss provisions. Second, there are no significantly different earnings management behaviors between Islamic banks with and without Shari'ah Supervisory Boards. Third, several Shari'ah Supervisory Board characteristics, such as size and the presence of members from Auditing Organization for Islamic Financial Institutions, are important determinants of the earnings management of Islamic banks who have Shari'ah Supervisory Boards.

Purpose This paper aims to examine the impact of Shari’ah supervisory boards (SSBs) on the performance of Islamic banks (IBs). It also tests whether SSBs’ attributes affect the performance of IBs. Based on a sample of 1,803 Islamic bank-year observations from 82 banks in 15 countries over the period 1993-2014 and controlling for factors known to affect bank performance, this study reveals a robust and significant positive relationship between SSBs and Islamic bank performance. This study also shows that the characteristics of SSBs affect the performance of IBs. This research reveals how SSBs influence the performance of IBs, as well as the processes and roles SSBs use to ensure Shari’ah compliance in business transactions. Design/methodology/approach The purpose of this study design is to relate SSB presence, size and diversity to financial performance using three techniques. The first technique is a multivariate data analysis that analyzes data arising from more than one variable. The second technique is a clustered regression (clustering by bank), which corrects for serial correlation and produces unbiased t-statistics. Because this sample is drawn from panel data, it is expected serial autocorrelation of the independent variables and error term within banks. In cases where within-company correlation exists, t-statistics based on average regression coefficients from year-by-year regression are upwardly biased and potentially severe (Peterson, 2009). Therefore, this study uses a technique that agrees with Stock and Watson (2002), who show that the standard method of calculating heteroskedasticity-robust standard errors for the fixed-effects estimator generates inconsistent variance estimates. Thus, using the clustered regression is consistent with the fixed-effects estimator. The third technique is a two-stage least-squares regression that helps build an instrumental variable for robustness tests purposes. Findings The findings suggest that large corporate boards and large SSBs are more efficient in dealing with different monitoring and advisory roles than small SSBs. Consequently, this suggests that increasing the size of corporate boards and SSBs should improve monitoring and advisory functions, management behavior and organizational performance. Research limitations/implications It is possible that there is an upper limit to this benefit, however; we do not explore this limit, which therefore provides opportunities for additional research. Because Shari’ah compliance relates only to a rational legal framework of negative screening relegated to interest prohibition and limiting uncertainty. The interest prohibition and limiting uncertainty have not been investigated between the two samples due to data unavailability. In addition, limited accounting-based measures of financial performance may not accurately portray IB performance; hence, an additional market measure is implemented, which is Tobin’s Q. Practical implications Ultimately, these findings could help IBs improve their financial results by enhancing their internal and external governance mechanisms (Walsh and Seward, 1990). They provide a basis for developing larger, more diverse SSBs that are more focused on complying with Shari’ah and corporate governance. The results also have significant policy implications for improving firm-level corporate governance versus improving country-level institutional factors. Both views have their advocates. However, it is very difficult to reform the legal system in a short time. Still, this study shows that struggling IBs have a way to improve their corporate governance and simultaneously improve their financing environment. Originality/value This research contributes to the literature on the effects of SSBs on IBs’ organizational financial performance, processes and roles. It is the first to examine empirically the underpinnings of how SSBs affect organizational financial performance via agency theory and contingency theory.

(2015) 'Congurations of capacity for change in entrepreneurial threshold rms : imprinting and strategic choice perspectives.', Journal of management studies., 52 (4). pp. 506-530. Further information on publisher's website:http://dx.doi.org/10.1111/joms.12121 Publisher's copyright statement: This is the accepted version of the following article: Judge, W. Q., Wei Hu, H., Gabrielsson, J., Talaulicar, T., Witt, M. A., Zattoni, A., Lopez-Iturriaga, F., Chen, J., Shukla, D., Quttainah, M., Adegbite, E., Luis Rivas, J. Kibler, B. (2015). Congurations of capacity for change in entrepreneurial threshold rms: Imprinting and strategic choice perspectives. Journal of Management Studies, 52(4): 506-530, which has been published in nal form at http://dx.doi.org/10.1111/joms.12121. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.Additional information: Use policyThe full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. Configurations of Capacity for Change in Entrepreneurial Threshold Firms: Imprinting and Strategic Choice PerspectivesABSTRACT Imprinting theory suggests that founding conditions are 'stamped' on organizations, and these imprinted routines often resist change. In contrast, strategic choice theory suggests that the firm can overcome organizational inertia and deliberately choose its future. Both theories offer dramatically different explanations behind an organization's capacity for change. IPO firms provide a unique context for exploring how imprinting forces interact with strategic choice factors to address organizational capacity for change as a firm moves from private to public firm status. Juxtaposing imprinting and strategic choice perspectives, we employ fuzzy set to examine the multi-level determinants of organizational capacity for change.Our cross-national data reveals three effective configurations of organizational capacity for change within IPOs, and two ineffective configurations. Our results suggest that the antecedents of organizational capacity for change in entrepreneurial threshold firms are nonlinear, interdependent, and equifinal.Word Count: 138 (< 150)

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