Chapter 4

Data Analysis and Interpretation

Introduction
This chapter represents from where the data is collected how to calculate the data which banks
are selected for the data. It explains which method is used to analyze the data and also shows the
interpretation of the data.

Banks:
In this study, two banks of Oman are selected for the analysis. these banks are selected because
they provided high bank facilities all over Oman. There are the following banks that are selected:

 Muscat Bank
 Dhofar bank

Muscat Bank:

The bank of Muscat was reputable in 1982. Muscat bank provides corporate finance, financial
services, private equity, treasury, commercial equity, and asset management services in the
Sultanate of Oman.

Dhofar Bank:

The Bank of Dhofar was founded in 1990 and is based in Muscat. Financial services, commercial
banking, and Reserve bank and Equities are the bank's three main business segments. It now
operates a network of sixty-six branches (Bank Dhofar) and ten Maisa rah Islamic Banking
divisions.

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Data
The data of the banks that are mentioned above are collected from the period 2016 to 2020 to
explore the relation among board size and earning management, gender diversity and earning
management, firm size, and earning management

Data of the Muscat Bank:

Earning Board size Gender Institutional Audit Committee

management diversity Ownership

159,904 9 0 2% 2

175,905 9 0 2.21% 3

158,473 9 0 2.24% 2

182,509 9 0 2.30% 3

163,933 9 0 2.36% 2

Table 4.1

Interpretation:

The following formula is used for calculating the earning management

“Operating cashflow = Operating Income + Depreciation – Taxes + Change in Working

Capital.”

Through calculating all the mentioned variables in the formula getting the operating cash flow.
Then difference the operating cash flow and net income the earning management obtained. The
board variable board size is the board members of the bank. Gender diversity means how many
females are working in the bank. The data of the variable institutional ownership is obtained
through how many shares of the foreigners. The audit committee data is obtained through how
many members are on the audit committee

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Earning management

This management vision is to get profit

Earning Managment
182,509

175,905

163,933

159,904
158,473

2016 2017 2018 2019 2020

Fig 4.1

Interpretation

The graph indicates that from 2016 to 2017 the earning management increases in 2017 to 2018
the earning management decreases in 2018 to 2019 the earning management increases but in
2019 to 2020 the earning management decreases.

Institutional ownership

These are foreigners shares how many shares of foreigners shows that how many investments
coming from the abroad

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 Institutional owership
2.36%
2.30%
2.24%
2.21%

2.00%

2016 2017 2018 2019 2020

Fig 4.2

Interpretation

The graph indicates that in all the years 2016 to 2020 the shares are increasing this indicates the
increasing trend.

Regression Analysis
For the analysis, the regression line is used to explore the relationship among the relation among
board size and earning management, gender diversity and earning management, firm size, and
earning management. The regression analysis shows that how the variables affect each other is it
positive, negative, or no relation between the variables. it is helpful for future prediction and
decision-making.

There is the following regression line

EM = a + b1BS + b2GD + b3IO + b4AC + e

EM = earning management (Discretionary accrual)

BS = board size

GD = Gender diversity

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IO = Institutional ownership

AC = Audit committee

e = error term

Earning management is the dependent variable and the all other three variables are the
independent and e is the error term

Multiple Regression Analysis

There are the three independent variables and 1 dependent shown in this study sued the multiple
regression analysis the following table demonstrates the conclusions of multiple regression

Models. R R2 Standard error Adj R square

EM 0.999978 0.999957 2471.938 -0.00017

ANOVA

Sum of Square Degree of freedom Mean square F. value

Regression 1.42E+11 4 3.55E+10 5801.633

Residual 6110478 1 6110478

Total 1.42E+11 5

Coefficients Standard error t Stat

Intercept 0 - -

Board size 10883.15 2236.525 4.866097

Gender diversity 0 0 65535

Institutional 1241516 926072.9 1.340624

ownership
Audit Committee 17754.17 2313.329 7.674725

Table 4.2

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Interpretation
The table indicates that the value of R is 0.999978 and the value of R2 is 0.999957. If the R2
value is more than 0.8 in a regression study, the independent variables strongly affected or
explained the dependent variable. R and R2 are both greater than 0.8, and if R2 is close to or
equal to 1, the independent variables strongly influence the dependent variable. As a result, these
factors have a positive influence on the dependent variable.

The ANOVA table specifies the sum of the square of the regression, the mean square, and the
degree of freedom of all the company’s variables. The degree of freedom of all the variables is 4
which is satisfactory or significant. The F value is 5801.633 that is significant. The intercept is
constant so it is 0. All the variable's coefficient is positive. So, the board size has a positive
impact on earning management. Gender diversity does not affect earning management.
institutional ownership has a positive relationship with earning management and audit committee
also has a positive effect on earning management.

Data of the Dhofar Bank:

Earning Institutional Audit

management Board size Gender diversity Ownership Committee

42,106 8 0 1 2

49,584 8 0 1.28% 2

55,872 8 1 1.48% 3

59,143 10 1 1.78% 3

54,220 12 1 1.92% 3
Table 4.3

Interpretation:

The following formula is used for calculating the earning management

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“Operating cashflow = Operating Income + Depreciation – Taxes + Change in Working
Capital.”

Through calculating all the mentioned variables in the formula getting the operating cash flow.
Then difference the operating cash flow and net income the earning management obtained. The
board variable board size is the board members of the bank. Gender diversity means how many
females are working in the bank. The data of the variable institutional ownership is obtained
through how many shares of the foreigners. The audit committee data is obtained through how
many members are on the audit committee

Earning management

This management vision is to get profit

Earning managment
70,000

60,000

50,000

40,000

30,000

20,000

10,000

0
2016 2017 2018 2019 2020

Fig 4.3

Interpretation

The graph indicates that from 2016 to 2019 the earning management increases. In 2019 to 2020
the earning management decreases

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Board Size

The represents the members in the bank’s board

Board size

12

10

8 8 8

2016 2017 2018 2019 2020

Fig 4.4

Interpretation

The graph indicates that in 2016 to 2018 members in the board are the same but in 2019 to 2020
the members are increasing so the graph shows the constant and the increasing trend .

Regression Analysis
For the analysis, the regression line is used to explore the relationship among the relation among
board size and earning management, gender diversity and earning management, firm size, and
earning management. The regression analysis shows that how the variables affect each other is it
positive, negative, or no relation between the variables. it is helpful for future prediction and
decision-making.

There is the following regression line

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EM = a + b1BS + b2GD + b3IO + b4AC + e

EM = earning management (Discretionary accrual)

BS = board size

GD = Gender diversity

IO = Institutional ownership

AC = Audit committee

e = error term

Earning management is the dependent variable and the all other three variables are the
independent and e is the error term

Multiple Regression Analysis

There are the three independent variables and 1 dependent shown in this study sued the multiple
regression analysis the following table demonstrates the conclusions of multiple regression

Models. R R2 Standard error Adj R square

EM 0.999593 0.999186 3350.133 -0.00326

ANOVA

Sum of Square Degree of freedom Mean square F. value

Regression 1.38E+10 4 3.44E+09 306.9404

Residual 11223391 1 11223391

Total 1.38E+10 5

Coefficients Standard error t Stat

Intercept 0 - -

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 Board size -404.672 1184.463 -0.34165

Gender diversity -18785 5881.866 -3.19371

Institutional -7570.47 4799.232 -1.57743

ownership
Audit Committee 26458.03 5027.47 5.262693

Table 4.4

Interpretation
The table indicates that the value of R is 0.999593 and the value of R2 is 0.999186. If the R2 value
is more than 0.8 in a regression study, the independent variables strongly affected or explained
the dependent variable. R and R2 are both greater than 0.8, and if R2 is close to or equal to 1, the
independent variables strongly influence the dependent variable. As a result, these factors have a
positive influence on the dependent variable.

The ANOVA table specifies the sum of the square of the regression, the mean square, and the
degree of freedom of all the company’s variables. The degree of freedom of all the variables is 4
which is satisfactory or significant. The F value is 306.9404 is significant. The intercept is
constant so it is 0. Some variables are positive coefficients and some variables are negative
coefficients. So, the board size has a negative relationship with earning management. Gender
diversity has a negative relationship with earning management. institutional ownership has a
negative relationship with earning management and audit committee has a positive effect on
earning management.

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Chapter 5

RESULTS, RECOMMENDATIONS, AND CONCLUSION

Results
Following the research and analysis, there are the following results of the Muscat bank revealed
that the coefficient value is 10883.15 and the sign is positive. So, the board size sign is positive
so the board size has a positive relationship with earning management

Aa compares the Dhofar bank the following results of the Dhofar bank revealed that the
coefficient value is -404.672 and the sign is negative. So, the board size sign is negative so the
board size has a negative relationship with earning management.

The Muscat bank findings revealed that the gender diversity value is zero because there is no
female worker is in Muscat bank so there is no relation with management earning.

Aa compares the Dhofar bank the following results of the Dhofar bank revealed that the
coefficient value is -18785 and the sign is negative. So, the board size sign is negative so gender
diversity has a negative relationship with earning management.

In institutional ownership of Muscat bank that shows the how many shares of the foreigner is in
the Muscat bank coefficient value is 1241516 and the sign is positive so the institutional
ownership has a positive link with earning management it shows that when the shares are
increasing so the profit is also increased.

Aa compares the Dhofar bank the following results of the Dhofar bank exposed that the
coefficient value is -7570.47 and the sign is negative. So, the institutional ownership sign is
negative so the institutional ownership has a negative link with earning management.

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The Muscat bank findings revealed that the audit committee value is 17754.17 and the sign is
positive so the audit committee has a positive link with earning management

Aa compares the Dhofar bank the following results of the Dhofar bank revealed that the
coefficient value is 26458.03 and the sign is positive. So, the board size sign is positive so the
audit committee has a positive connection with earning management.

Conclusion
The data of two banks Muscat bank and Dhofar bank are used for analysis from the period 2016
to 2020. The regression method is utilized for the analysis to check the relation between the
dependent variable and the independent variables. Through calculating all the mentioned
variables in the formula getting the operating cash flow. Then difference the operating cash flow
and net income the earning management obtained. The board variable board size is the board
members of the bank. Gender diversity means how many females are working in the bank. The
data of the variable institutional ownership is obtained through how many shares of the
foreigners. The audit committee data is obtained through how many members are on the audit
committee. The Muscat bank value of R is 0.999593 and the value of R2 is 0.999186. The Dhofar
R2 value is more than 0.8 in a regression study, the independent variables strongly affected or
explained the dependent variable. R and R2 are both greater than 0.8, and if R2 is close to or
equal to 1, the independent variables strongly influence the dependent variable. As a result, these
factors have a positive influence on the dependent variable. The ANOVA table specifies the sum
of the square of the regression, the mean square, and the degree of freedom of all the company’s
variables. The degree of freedom of all the variables is 4 which is satisfactory or significant. The
F value of Muscat is 5801.633 that is significant and the F value of Dhofar bank is 306.9404 both
are significant. Both bank’s intercept is constant so it is 0. The results indicate that the Muscat
bank has a positive relation with board size and earning management, firm size, and earning
management, Audit committee has no relation with earning management when comparing the
findings with Dhofar bank. The results indicate that the Dhofar bank has a negative relation with
board size and earning management, firm size, and earning management only the audit
committee has a positive link with earning management.

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Future Recommendations
There is the following future recommendation that is obtained through the analysis for Muscat
bank and Dhofar bank.

 In Muscat bank, there is no female worker so must be higher than the female worker as
well.
 The foreigner share also increases when the shares are purchased then investment
increases and gets more profit.
 The Muscat bank also increases the board size because the board size is the same in all
the years.
 In Dhofar bank, only one female employee is working they must higher the more female
employees.

Limitations of the Study:

The study is only used the five years data and only select the two variables. This study only used
the data for Oman. So, the future recommendations only for the Omani banks.

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References

 The annual report 2016 bank of Muscat.

 The annual report 2017 bank of Muscat.
 The annual report 2018 bank of Muscat
 The annual report 2019 bank of Muscat.
 The annual report 2020 bank of Muscat.
 The annual report 2016 bank of Dhofar.
 The annual report 2017 bank of Dhofar.
 The annual report 2018 bank of Dhofar.
 The annual report 2019 bank of Dhofar.
 The annual report 2020 bank of Dhofar.

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