Journal of Contemporary Issues in Business and Government

Abstract

The accounting environment plays a vital role in the banking sector. The present paper
explores the predictive power of the accounting environment in developing financial
reports. The commercial banks of Pakistan are selected as the study context. The study
employs a deductive approach which is handled through a path analysis. The findings
of the study show a significant and positive effect of the accounting environment’s
constructs like liquidity, financial leverage (FL), profitability, earnings management
(EM), corporate governance (CG) and company life cycle (CLC) on the accounting
environment (AE) in the commercial banks of Pakistan. The findings of a study would
further provide the guidelines to policymakers and planners in developing the
conducive AE, which would increase the profitability and CLC. Moreover, the study
outcomes would contribute to the domain literature, i.e. finance, management and
banking in the context of financial reports development.