Audit committee attributes and real earnings management of Islamic banks

Purpose This study aims to investigate the effects of audit committees on the real earnings management (REM) in Islamic banks. Design/methodology/approach The sample data used in the study were retrieved manually from annual reports of 57 fully operational Islamic banks across 16 countries between 2012 and 2023. Findings The results indicate that the size of Audit Committee (AC), the presence of independent directors on the AC and AC diligence exert a significant and negative influence on REM in Islamic banks. In contrast, the proportion of directors with PhD and female directors in AC positively influences REM. However, the presence of foreign directors in AC does not impact REM in Islamic banks. Research limitations/implications The study used six AC characteristics as part of the corporate governance mechanism to investigate their impact on REM in Islamic banks from 2012–2023. Originality/value The study contributes to the scanty literature showing how AC attributes influence REM in Islamic banks.