ENHANCING LEGAL AND SUPERVISORY ENVIRONMENT OF PALESTINIAN BANKS THROUGH ACCOUNTING CONSERVATISM AND PALESTINIAN BANKING GOVERNANCE MANUAL AMENDMENTS

Abstract

This study investigates the impact of accounting conservatism on the market value of Palestinian banks and the role of governance in enhancing the practice of accounting conservatism. It examines the amendments made to the Palestinian Banking Governance Manual in 2014 and their contribution to strengthening or limiting the use of accounting conservatism. The study analyzes data from 2009 to 2019 for six local banks listed on the Palestine Exchange using the analytical approach and Stata statistical program. The findings reveal a positive effect of accounting conservatism on the market value of Palestinian banks. There is also a positive relationship between the degree of accounting conservatism and the application of governance rules, indicating the importance of governance in reducing profit management. However, the study found no effect of accounting conservatism on the quality of disclosure. The researcher recommends the issuance of binding legislation to promote the application of accounting conservatism in financial reporting and obligating external auditors to express their opinion on the degree of accounting conservatism practiced by Palestinian banks