摘要：Managerial opportunism, such as earningsmanagement, is a rampant, but often discreet,among certain managers. Agency theory andthe notion of conflict of interest are used asbases to assume that managers would resolveto engage with inappropriate activities for theirpersonal benefits. Distortion of earnings woulderode investor confidence and is detrimental tothe capital market. The Islamic capital marketwith Shariah-compliant firms is expected not toengage in activities that go against the religioncode of conduct. The main purpose of this studyis to investigate managerial opportunism amongShariah-compliant companies, specifically therelationship between real earnings managementand the risk of financial distress, leverage, andfree cash flow. This study employs 4,115 datafrom 694 sample companies for five years(2009–2013). Findings conclude that the riskof financial distress, leverage, and free cash flowhave a significant relationship with earningsmanagement among Shariah-compliantcompanies. This study provides evidence thatfurther improvements on corporate governanceare necessary to ensure that Shariah-compliantcompanies adhere with the Shariah requirement.
