The Impact of Digital Technology in Accounting Processes on Earnings Management Practices in Commercial Banks: A Standard Applied Study on Commercial Banks Operating in the Green Mountain Region (2021-2025)

Abstract

This study aims to examine and analyze the empirical impact of utilizing digital technologies in accounting operations on earnings management practices within commercial banks operating in the Green Mountain region (2021–2025). Driven by rapid technological developments in the banking sector, commercial banks have integrated sophisticated solutions including Artificial Intelligence (AI), Cloud Computing, Blockchain technology, and Robotic Process Automation (RPA) into their accounting and financial management systems. The study employs a descriptive-analytical approach for theoretical background and an econometric approach based on the "Modified Jones Model" to measure discretionary accruals as a proxy for earnings management. The empirical sample comprises panel data from 10 main commercial bank branches in the Green Mountain region over the period 2021–2025, yielding 50 bank-year observations. The econometric findings demonstrate a statistically significant negative impact of adopting accounting digital technologies on earnings management practices. Digitalizing accounting processes significantly improves financial disclosure and transparency, reduces information asymmetry, and restricts management’s ability to manipulate financial statements or subjectively alter accounting estimates. The study recommends accelerating investments in digital accounting infrastructure and updating regulatory and supervisory frameworks to embrace digital governance principles.