An-Najah National University Faculty of Graduate Studies THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY DISCLOUSRE AND ACCOUNTING COMPARABILITY ON EARNINGS PERSISTENCE OF JORDANIAN AND PALESTINIAN BANKS FOR THE YEARS 2012-2022 By Thamer Osama Shawkat Khaliefa Supervisors Prof. Abdulnaser Nour Dr. Sameh Atoot This Thesis is Submitted in Partial Fulfillment of the Requirements for the Degree of Master of Accounting, Faculty of Graduate Studies, An-Najah National University, Nablus, Palestine. 2024 II THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY DISCLOUSRE AND ACCOUNTING COMPARABILITY ON EARNINGS PERSISTENCE OF JORDANIAN AND PALESTINIAN BANKS FOR THE YEARS 2012-2022 By Thamer Osama Shawkat Khaliefa This Thesis was Defended Successfully on 04/12/2024 and approved by Prof. Abdulnaser Nour Supervisor Signature Dr. Sameh Atoot Co-Supervisor Signature Dr. Fadi Shada External Examiner Signature Dr. Sa'ed Alkoni Internal Examiner Signature III Dedication I dedicate my thesis to My parents, whose continuous support, encouragement, and belief in my abilities has been the guiding lights throughout this journey. To all those who have played a part, big or small, in shaping my academic path and personal growth…. IV Acknowledgment I would like to extend my greatest and heartfelt appreciation to my special supervisor Prof. Abdulnaser Nour for his guidance, support and encouragement throughout this project. I would like to also extend my deepest gratitude to Dr. Sameh Atoot whose door has been always open for any help and feedback V Declaration I, the undersigned, declare that I submitted the thesis entitled: THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY DISCLOUSRE AND ACCOUNTING COMPARABILITY ON EARNINGS PERSISTENCE OF JORDANIAN AND PALESTINIAN BANKS FOR THE YEARS 2012-2022 I declare that the work provided in this thesis, unless otherwise referenced, is the researcher’s own work, and has not been submitted elsewhere for any other degree or qualification. Student's Name: Thamer Osama Shawkat Khaliefa Signature: Thamer Osama Shawkat Khaliefa Date: 4/12/2024 VI List of Contents Dedication ............................................................................................... III Acknowledgment ..................................................................................... IV Declaration ...............................................................................................V List of Contents ........................................................................................ VI List of Tables .......................................................................................... IX List of Figure .............................................................................................X List of Appendices .................................................................................... XI Abstract ................................................................................................ XII Chapter One: Introduction and Theoretical Background ....................................... 1 1.1 Introduction ......................................................................................... 1 1.2 Problem Statement ................................................................................ 3 1.3 Questions of the Study ........................................................................... 4 1.4 Importance of the study .......................................................................... 4 1.5 Objectives of the study ........................................................................... 5 1.6 Theoretical Framework .......................................................................... 5 1.6.1 Accounting Comparability ..................................................................... 5 1.7 Theories of Accounting Comparability ....................................................... 6 1.7.1 Positive Accounting Theory ................................................................... 6 1.7.2 Normative Accounting Theory ............................................................... 6 1.7.3 Agency Theory ................................................................................... 7 1.7.4 Disclosure Theory ............................................................................... 8 1.7.5 Stewardship Theory ............................................................................. 8 1.8 Corporate Social Responsibility Disclosure ................................................. 9 1.9 Theories of Corporate Social Responsibility Disclosure ................................. 10 1.9.1 Legitimacy Theory ............................................................................. 10 1.9.2 Stakeholder Theory ............................................................................ 10 1.9.3 Signal Theory.................................................................................... 10 1.9.4 Voluntary Disclosure Theory ................................................................ 11 1.9.5 Institutional Theory ............................................................................ 12 1.10 Introduction to Earning Persistence ......................................................... 12 1.10.1 Financial Statement Analysis and Earnings Persistence .............................. 13 VII 1.10.2 Factors Affecting Earnings Persistence .................................................. 14 1.11 Literature Review and Hypothesis Development ........................................ 15 1.11.1 The relationship between CSRD and earnings persistence .......................... 16 1.11.2 The relationship between the comparability of accounting information and the earnings persistence ................................................................................... 18 1.12 Comments on the Previous Studies ......................................................... 19 Chapter Two: Methodology .......................................................................... 21 2.1 Introduction. ..................................................................................... 21 2.1.1 Study population and sample................................................................. 21 2.2 Data Sources ....................................................................................... 22 2.3 Measurement of Variables ...................................................................... 22 2.3.1 Independent Variables ......................................................................... 22 2.3.2 Dependent Variable ............................................................................ 26 2.3.3 Control Variables ............................................................................... 26 2.3.4 Control variables at the country level ...................................................... 28 2.4 Research Framework ............................................................................ 30 2.5 The research model .............................................................................. 30 2.6 Statistical Procedures ............................................................................ 32 2.6.1 Statistical Description .......................................................................... 32 2.6.2 Correlation Matrix .............................................................................. 32 32.6. Multiple Linear Regression ................................................................... 33 Chapter Three: Research Analysis and Results .................................................. 34 3.1 Descriptive statistics of the study variables ................................................. 34 3.1.1 Descriptive Statistics for Palestinian Banks ............................................... 34 3.1.2 Descriptive Statistics for Jordanian Banks ................................................ 38 3.2 Comparison between the Palestinian banking sector and the Jordanian banking sector...................................................................................................... 42 3.3 Correlation Matrix ............................................................................... 44 3.4 Multiple Linear Regression .................................................................... 51 3.4.1 Hypothesis Testing ............................................................................. 52 3.5 Hypothesis Testing For Palestinian And Jordanian Banks ............................. 54 3.6 Hypothesis Testing Summary ................................................................ 57 Chapter Four: Conclusion & Recommendations ................................................ 58 VIII 4.1 Overview ........................................................................................... 58 4.2 Discussion ......................................................................................... 58 4.3 Conclusions ........................................................................................ 63 4.4 Recommendations ................................................................................ 64 4.5 Limitations ......................................................................................... 65 4.6 Future Research ................................................................................... 66 References ............................................................................................... 67 Appendices .............................................................................................. 81 ب ......................................................................................................الـملخص IX List of Tables Table 1: Distribution of banks listed on the Palestine Stock Exchange ......................... 21 Table 2: Distribution of banks listed on the Jordanian Stock Exchange ........................ 22 Table 3: CSRD disclosure index ................................................................................... 25 Table 4: Summary table of study variables and methods of measuring them ................ 29 Table 5: Descriptive Statistics for Palestinian Banks .................................................... 35 Table 6: Descriptive Statistics for Jordanian Banks ...................................................... 39 Table 7: Comparison between the Palestinian banking sector and the Jordanian banking sector ............................................................................................................................. 42 Table 8: Correlation matrix applied to Jordanian and Palestinian bank data ................. 46 Table 9: Correlation matrix applied to Jordanian banks data only ................................. 48 Table 10: Correlation matrix applied to Palestinian banks data only ............................. 50 X List of Figure Figer 1: Research Model ............................................................................................... 30 XI List of Appendices Appendix A: Tables ...................................................................................................... 81 Table 11: Multiple Linear Regression Analysis Applied to Data from Palestinian and Jordanian Banks ............................................................................................................ 81 Table 12: Hypothesis Testing For Palestinian And Jordanian Banks ............................ 81 Table 13: Hypothesis Testing Summary........................................................................ 82 Table 14: Interpretation of the Symbols Used in the Study ........................................... 82 Table 15: Statistical description of Jordanian banks ...................................................... 84 Table 16: Statistical description of Palestinian banks .................................................... 84 Table 17 Pooled Model: ................................................................................................ 86 Table 18: Breusch-Pagan Test ....................................................................................... 86 Table 19: random effects model .................................................................................... 87 Table 20: Hausman Test ................................................................................................ 87 Table 21: Fixed Effect Model ....................................................................................... 88 Table 22: MLR For Jordenian banks ............................................................................. 89 Table 23 PSB Regression: ............................................................................................. 89 XII THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY DISCLOUSRE AND ACCOUNTING COMPARABILITY ON EARNINGS PERSISTENCE OF JORDANIAN AND PALESTINIAN BANKS FOR THE YEARS 2012-2022 By Thamer Khaliefa Supervisors Prof. Abdulnaser Nour Dr. Sameh Atoot Abstract This study aimed to analyze the impact of corporate social responsibility disclosure (CSRD) and accounting comparability on earnings persistence in Jordanian and Palestinian banks during the period from 2012 to 2022. A mixed-methods approach was adopted, combining content analysis of CSRD reports and quantitative analysis of banks' financial statements, using statistical tools to examine the relationship between these variables and earnings persistence. To achieve this objective, CSRD and accounting comparability were studied as independent variables, while debt, cash, and bank size were included as control variables, along with inflation and GDP as independent control variables. The study sample included the entire population, consisting of 7 Palestinian banks and 14 Jordanian banks. A multiple linear regression analysis was conducted using panel data. The study yielded several important findings. First, it was found that CSRD has a negative impact on the ability to predict earnings, reflecting an opportunistic perspective where such disclosures may be used to obscure earnings management practices and enhance reputation unethically. The study also showed that accounting comparability plays a positive role in improving the ability to predict earnings, as comparable financial reports enhance transparency and reduce uncertainty, enabling investors and stakeholders to assess banks' financial performance more accurately and fairly. Regarding the control variables, the study found that inflation does not significantly impact earnings predictability, as banks demonstrated flexibility in adapting to price changes through their financial policies and interest rates. In contrast, GDP growth had a significant positive impact, reflecting the level of economic activity and the increased demand for banking services, which enhances earnings stability. However, variables XIII such as capital adequacy, cash liquidity, net interest margin, operational efficiency, and provisioning for loan losses did not show a significant impact on earnings predictability. Additionally, the analysis revealed a negative correlation between debt and profits stability, underscoring the significance of prudent and restrained use of debt financing. The study also shown that bank size, profit yield, and current liquidity all significantly affect profits forecasts. The research made a number of recommendations in light of these findings with the goal of enhancing earnings predictability and stability. Among these suggestions were the significance of raising the degree of openness in social responsibility disclosure and strengthening accounting comparability through the adoption of international and standardized accounting standards. This study also underlined the significance of prudently managing debt and liquidity as well as creating plans to deal with GDP swings. The study also highlighted the significance of coordinating with central banks to enhance financial and regulatory policies, as well as the necessity of putting the Basel Accords into effect, which support the stability of the banking system by successfully managing risks and highlighting the significance of maintaining adequate capital levels. Keywords: Corporate Social Responsibility Disclosure (CSRD), Accounting Comparability, Earnings Persistence, Jordanian Banks, Palestinian Banks, Financial Stability. 1 Chapter One Introduction and Theoretical Background 1.1 Introduction Companies have begun to see corporate social responsibility disclosure (CSRD) as a strategic tool to achieve this goal by aligning their operations with social norms, as maintaining the company's ability to generate profits is the primary means by which they aim to increase shareholder wealth (Crane and Matten, 2021). According to Hoang, Abeysekera, and Ma (2018), there is a positive correlation between thorough CSR disclosure and long-term profits persistence, demonstrating how moral business practices increase shareholder value. A company's commitment to ethical behavior is assessed by stakeholders using the volume and type of CSR disclosure as an indicator of a company's ethical behavior (Rezaee, Dou, & Zhang, 2020). In addition to the role of social responsibility disclosure in improving the continuity of profits, Davoodi (2019) shows that there is a major role for accounting comparison in determining the extent of the continuity of profits in the company. Khuong et al. (2022) shows that both social responsibility disclosure and accounting comparison can improve earnings sustainability, as comparison between companies and accounting standards affects in some way the reported CSR projects, which contributes to enhancing their impact on earnings sustainability. De Franco et al. (2011) notes that the more comparisons there are, the more accurate assessments of a company’s financial performance can be made, which over time will impact the consistency and predictability of earnings. It is therefore of utmost importance for stakeholders who rely primarily on financial statements to understand this impact (Hoang et al., 2020). It is worth noting that emphasizing differences in accounting comparability and the persistence of the impact of CSR disclosures on earnings at the industry level is of a paramount importance (Vo & Arato, 2020). Accordingly, different industries may put different priorities on CSR and those laws of a specific industry may affect reporting requirements, and different industries may place different priorities on CSR (Thuy et al., 2020). Hence, this study examines potential differences between CSR initiatives and 2 accounting rules in terms of their impact on long-term earnings in various industries. It also attempts to highlight the contextual elements and factors leading to different effects and outcomes on earnings persistence through differences’ analysis across industries (Khuong, et al., 2022). In a comprehensive and broader sense, social responsibility refers to the commitment and dedication of an organization to its various stakeholders (Vitolla et al., 2019). This duty goes beyond making money only, as those duties include the workers, environment and society as a whole, as well as adding social responsibility to the general duty that businesses have to all stakeholders (Vitolla et al., 2019). In other words, the responsibilities of an organization extend beyond what is provided by law to contain the general objectives of social welfare promotion, environment protection, the quality of goods and services improvement, as well as goodwill promotion among employees and training programs establishment (Wirba, 2024). Therefore, these organizations have additional societal and legal obligations towards community (Khanaghah, Sadeghi, & Ghadakforoushan, 2019). Organizations acknowledge and recognize the significance of openness and transparency concerning their commitment to social and environmental concerns in the context of CSR disclosure (Chiu, 2015). Organizations can efficiently communicate their efforts related to social welfare, product and service quality improvement, environmental sustainability, as well as community engagement, employee development, and product and service quality through comprehensive disclosure practices (Vitolla et al., 2019). Such disclosure can be manifested as a means of demonstrating to stakeholders that the organization is accountable to them, building trust, and enhancing the attitudes of investors, consumers, and society as a whole (Vo & Arato, 2020). In a nutshell, an organization’s commitment to comprehensive responsibility largely depends on its CSR disclosure, which aims to align its operations with the interests of society and the environment (Thuy, Khuong, Canh, & Liem, 2021). Based on the above, this study aims to shed light on the impact of corporate social responsibility disclosure and accounting comparability on earnings sustainability. The study will focus on commercial and Islamic banks in both Palestine and Jordan to achieve a deeper understanding of this relationship. 3 1.2 Problem Statement CSR is given more consideration in mature economies than in new ones. Different nations have different effects on CSR awareness and behavior due to differences in their economic and social development. In addition, the way that CSR is viewed varies depending on cultural and traditional customs. Even so, wealthy nations participate heavily in CSR. According to Dahmash et al. (2023), companies in today’s business environment are recognizing the reporting significance their CSR activities in order to fulfill their ethical and social responsibilities. Financial statements are crucial to use when making decisions for stakeholders, mainly analysts and investors. However, there is still much to learn about such underexplored and critical topic in the academic literature when it comes to how accounting comparison and CSR disclosure have an impact on earnings persistence and sustainability. Despite the relationship between social responsibility disclosure and accounting comparability, studies examining their joint impact on earnings sustainability are still limited. While many studies have addressed the impact of each of these two variables on earnings sustainability separately, studying their impact together, especially in the banking sector in Palestine and Jordan, is still insufficient, despite the clear integration between them in enhancing earnings sustainability and financial performance quality. Although the increasing significance of CSR disclosures, it is uncertain how these disclosures affect profitability sustainability and earning persistence. More and further research and data is also needed just to acknowledge and understand how accounting comparability affects the relationship between CSR disclosures and earnings persistence. Stakeholders’ understanding of the financial performance of a certain company mainly depends on the consistency of its earnings. This would be an important measure of the quality and reliability of financial reporting (Al-Akayleh & Saaydah, 2022). 4 1.3 Questions of the Study The study tries to answer the following questions: 1. How does the extent and nature of Corporate Social Responsibility disclosure influence the persistence of earnings in Jordanian and Palestinian banks? 2. How does accounting comparability influence the persistence of earnings in Jordanian and Palestinian banks? 1.4 Importance of the study The sustainability of profits may be affected in the long term as a result of the impact of corporate social responsibility disclosure, which in turn affects stakeholders’ perceptions of the company’s ethics, principles, and even social responsibility practices. Stakeholder confidence can be enhanced and gained through positive disclosures of corporate social responsibility and what companies do to preserve the interests of all parties and protect them from any potential violations. Also, social responsibility disclosure increases the likelihood of achieving more stable and long-term profits. Therefore, companies must work to understand the relationship between corporate social responsibility disclosure and the sustainability of profits. On the other hand, standardizing accounting procedures across companies, known as accounting comparability, helps ensure the sustainability of profits. So that when accounting data is more comparable, analysts and investors can evaluate companies’ financial performance more clearly and accurately. This enhances investor confidence and market efficiency, because companies that provide consistent accounting data make it easier for others to understand their financial position. Therefore, we emphasize the importance of this study for researchers who seek to understand the relationship between earnings sustainability, social responsibility disclosure, and accounting comparison, and managers who seek to maintain the continuity of earnings in companies and maintain their financial performance. This study contributes to filling the research gap by exploring the relationship between social responsibility disclosure, accounting comparison, and earnings sustainability. It also provides important recommendations for investors, analysts, and decision makers to help them make better decisions based on financial statements. 5 1.5 Objectives of the study 1. To investigate the influence of the extent and nature of Corporate Social Responsibility disclosure (CSRD) on the persistence of earnings in Jordanian and Palestinian banks 2. To investigate the influence of accounting comparability on the persistence of earnings in Jordanian and Palestinian banks. 1.6 Theoretical Framework 1.6.1 Accounting Comparability Lim (2021) defined comparability as "the degree of standardization of accounting data that enables comparison of the financial accounts of several companies." Chen & Gong (2019) also defined the property of comparability of information as using the same supporting measurement methods in another institution that practices the same economic activity to enable its users to make a decision after making comparisons with similar institutions, which increases the effectiveness of decision-making. Davoodi (2019) also defined it as the ability to compare financial statements for a specific financial period with financial statements for a previous financial period or periods for the same institution, or to compare the financial statements of a specific institution with financial statements of other institutions or to compare financial statements with a general standard such as an industry standard, and IAS 01 requires that information be presented in comparison for at least one previous financial period. From these definitions, we conclude that the property of comparability of information is comparing the financial statements of the institution with itself or with other institutions during different time periods, the basic condition of which is to make accounting information comparable . 6 1.7 Theories of Accounting Comparability Positive Accounting Theory Anagnostopoulou (2024) shows that the positive accounting theory seeks to explain and analyze management's behavior in choosing accounting policies and predicting their effects. Based on this theory, the relationship between corporate social responsibility disclosure (CSRD) and accounting comparability on the continuity of profits can be explained from a practical and realistic perspective. Policies that serve management's economic and social interests must be chosen, and social responsibility disclosures are a reaction to stakeholder and societal demand (Hossain & Alam, 2016). Social responsibility disclosure is seen by Kim & Lee (2018) as a tactical instrument to improve openness and foster confidence with clients and investors, both of which help to lower doubts over the company's financial performance. Long-term financial stability and improved profits persistence result from firms' higher credibility and improved image in front of stakeholders when their social and environmental activities are openly disclosed (El-Halaby & Hussainey, 2015). However, accounting comparability is essential for allowing stakeholders to assess businesses' financial performance impartially (Chen et al., 2018). The positive accounting theory states that management bases its decision about accounting procedures on the financial incentives it hopes to attain. Investors and analysts may evaluate businesses' financial performance more precisely and impartially when consistent and comparable accounting standards are provided (Golmohammadi et al., 2021). Al-Dmour (2018) highlights that this improves a company's capacity to draw in investments and helps raise stability and profits expectations. Comparing businesses shows disparities in disclosure and performance, which motivates management to implement transparency and accounting practices that support long-term financial viability and profitability (Harrison & van der Laan Smith, 2018). Normative Accounting Theory According to Collins et al. (2009), normative accounting theory places a strong emphasis on creating accounting standards and guidelines that provide the intended outcomes and offer prescriptive guidance on how accounting should be carried out. Normative theories in accounting provide direction to industry practitioners and 7 standard-setting corporations and organizations to enhance the comparability of financial reporting (Pelger, 2016). For example, the establishment of comparable accounting standards, standardized reporting formats, and increased transparency requirements are urgently needed. This is to ensure that customers of different categories are making relevant comparisons across different firms (Hamed et al., 2024). As a result, accounting procedures ought to be designated to support and strengthen the availability of relevant data for the decision-making process, in addition to the societal objectives of accountability and transparency (Patty, Lamawitak, Goo, & Herdi, 2021). It is important to note that normative theories are being used to highlight the significance of principles-based accounting standards. This would improve and preserve flexibility while maintaining comparable in the quest for accounting comparability (Lundh, 2020). The main goal of these basic standards was to give businesses precise instructions for preparing financial statements, which they may then tailor to their particular set of circumstances. However, under the principles-based approach, normative accounting theory emphasizes the need for specific norms and disclosure requirements to avoid excessive heterogeneity in accounting processes that could hinder comparison (Sanada, 2021). According to Rogowska (2018), normative accounting theories play a crucial role in establishing the normative foundation of accounting practices by encouraging organizations that develop standards to enact legislation that encourages more consistency and comparability in financial reporting. Agency Theory Agency theory, which studies the relationship between principals (like shareholders) and agents (like managers), is essential to understanding the dynamics of accounting comparability. Because the principle grants the agent decision-making authority, information asymmetry becomes a significant problem in an agency relationship. In terms of accounting comparability, principals—investors and other stakeholders—use financial data to evaluate the agent's (management's) performance. Comparability in accounting is essential for resolving the agency problem and for effective monitoring. Comparable financial statements enable principals to assess the financial performance 8 of several firms, facilitating the review of executive decisions and actions (Zogning, 2022). According to agency theory, managers could be tempted to influence accounting decisions for their own benefit, which could jeopardize comparability. They may choose to employ selective accounting methods, which reduce performance comparability and make it more difficult to evaluate managerial activities for external stakeholders. However, managers may also act to improve comparability by exhibiting openness and coordinating their goals with those of external stakeholders. Accounting comparability is crucial in the framework of agency theory because it minimizes information asymmetry, balances the interests of principals and agents, and provides a basis for effective supervision and decision-making in agency partnerships (Partyka, 2021). Disclosure Theory Accounting comparability and disclosure theory are interconnected notions that shed light on the value of information disclosure in decision-making process. The theory affirms that companies disclose information in a way that is consistent and compatible with regulations, taking into consideration information asymmetry mitigation, in addition to enabling stakeholders to make well-informed decisions. In order to preserve and maintain the openness of financial data and to allow users to compare the financial outcomes of other businesses, disclosure is therefore essential in the context of accounting comparability. When there is comparable and adequate information, the accounting methods and principles used are much better comprehended by users themselves, helping them make more accurate, educated decisions about investments and credit (Al Amosh & Khatib, 2022). Stewardship Theory To illustrate this idea, Anh (2021) states that it is the duty of management to protect the long-term value of the company and balance its own interests with those of shareholders. Accordingly, CSR disclosure is a useful governance tool that enhances transparency and accountability. Caputo et al. (2021) argue that companies that disclose their social and environmental activities demonstrate their dedication to adopting responsible management principles and enhance trust between management and shareholders. Therefore, disclosure helps bridge the information gap and demonstrates 9 management’s concern for meeting the needs of stakeholders and society, both of which are beneficial for enhancing long-term profitability and financial performance stability. Kubikova and Jindrichovska (2016) assert that accounting comparability helps ensure the accuracy and consistency of financial statements across companies and time periods. According to management theory, providing comparable and clear financial statements helps build trust between shareholders and managers, as shareholders can use this information to accurately evaluate management performance and hold management accountable for the decisions taken (Kaawaase et al., 2021). This consistency enhances transparency and credibility and reduces doubts about the quality of earnings generated, contributing to earnings persistence (Rezaee & Tuo, 2019). 1.8 Corporate Social Responsibility Disclosure Niresh & Silva (2018) stated that “One of the main and key factors that affect a company's value is the degree of responsibility it has to its internal and external stakeholders or clients. Corporate social responsibility and the use of intangible assets such as intellectual capital, is the requirement that a company have reciprocal relationships with its stakeholders and the environment so that they acknowledge the company's existence. The financial success of any corporate, mainly financial and commercial banks has a significant impact on the value of the company. The value of a company's stock may increase if its financial performance improves and it draws in investors. If a company's financial performance signals a bright future, its stocks will be in high demand from investors and have an impact on the market price.” Previous research and evidence on corporate social responsibility and accounting comparability on earnings persistence of Jordanian, Palestinian Islamic and commercial banks that affects company value and financial performance has been conducted in Indonesia and overseas with a variety of findings. It was demonstrated how the disclosure of CSR has an impact on corporate value. The findings of the study by Ammarwaty, Zulpahmi & Sumardi (2020) indicated that disclosure of corporate social responsibility has no effect on corporate value. Information regarding a company's CSR efforts may be included in its annual sustainability or financial report. The management of stakeholder relationships and 10 harm reduction to firm operations are thought to be the main goals of CSR disclosure. Corporate social responsibility can be used as a tactic to boost company performance (Li, Gong, Zhang, & Koh, 2018). 1.9 Theories of Corporate Social Responsibility Disclosure Legitimacy Theory According to legitimacy theory, there may be a difference between what the public expects of an institution and what it really does. One strategy employed by businesses to bridge this gap is information sharing through financial reports and other communications tools. According to the legitimacy hypothesis, when organizations are asked about their legitimacy, they usually provide more information. A company that operates in an industry that significantly affects the environment may decide to disclose more information about its environmental activities in order to calm concerns about legitimacy (McClymont & Sheppard, 2020). Stakeholder Theory Stakeholder theory emphasizes the importance of considering the general interests of all internal and external parties in the company, whether they are employees, owners, managers, investors, financiers, creditors, customers, and other stakeholders (Sobida, Nourkholis, & Mardiati, 2018). According to this theory, the company deliberately chooses the option of disclosing data related to its environmental, social, and intellectual performance, with the aim of reassuring all stakeholders that the company cares for their interests and is keen to achieve them. Accordingly, a report is sent to stakeholders so that they are informed of the activities in which the organization is engaged. The stakeholder theory states that companies should use CSR disclosure as a key tool to address stakeholder issues, demonstrate their commitment to them, and develop fruitful working relationships. Signal Theory Signal idea is an important idea that provides an analytical framework for comprehending disclosures related to Corporate Social Responsibility (CSR). It is used by businesses as a tactical signaling technique. This idea states that various organizations should use CSR disclosure as a way to show their stakeholders how 11 committed they are to social and environmental responsibility. This theoretical framework also examines the content of sustainability reports, including how companies may utilize signaling to influence stakeholder views, get a competitive advantage, and improve their reputation. Three categories of signals exist: necessity, intentionality, and concealment (AL-sartawi & Reyad, 2018). Besides that, Signal Theory sheds light on the fact that there are several important signals for CSR disclosure; they are structure, timeliness and substance. Those certain information and data to be revealed are carefully considered by businesses, while framing them to meet stakeholder societal norms and interests. The disclosure process itself is manifested to be an acknowledgement of a firm’s commitment to the conducted ethical business. In this regard; however, those firms and organizations need to make sure that actual operations and CSR statements are both consistent; as distrust and mistrust might be created through these inconsistencies. In other words, the idea of signaling, which suggests that management may convey information about the company through various components of financial disclosure that investors may interpret as a signal, has been widely applied in accounting and auditing studies. Earnings timing is one such element of disclosure (Komara, Ghozali, & Januarti, 2019). Voluntary Disclosure Theory The primary focus of this theory is the voluntary aspect of CSR disclosure. This theory highlights the fact that some businesses shall voluntarily release information of CSR as a crucial, strategic decision. All of which are primarily affected by competitive positioning, management of reputation, as well as the relationships of stakeholders. In addition, this theory highlights that one method of signaling that a company is better than others is through voluntary disclosure, in which it releases more information than is needed by laws and regulations. Within the context and framework of the Corporate Social Responsibility Disclosure, this theory proposes that in order to meet and achieve certain goals strategically, companies can disclose their environmental and social actions voluntarily. Those companies or businesses really acknowledge that further details disclosure of CSR efforts is beneficial for their own relationship with stakeholders, position in the market, as well as for their brand as a whole (Consoni, Colauto, & de Lima, 2017). 12 Institutional Theory Institutional theory is one theory of a paramount importance for CSR activities. Based on this theory, CSR actions and activities are to be disclosed by firms or businesses in order to abide by institutional norms, regulations and expectations. Hence, organizations are being legitimate and recognized in their surroundings while they respect such institutional demands. Based on the lens of conformity to institutional demands, the institutional theory is a helping tool for explaining the idea to which certain data and information are being disclosed regarding organizations’ societal and environmental activities and actions. Therefore, it might be interpreted that one major driving element behind CSRD is the demand for sustainability, conformity and legitimacy to those accepted expectations and norms in the institutional surrounding in which these businesses operate (Chowdhury, 2021). In this sense, an organization's response to institutional factors and external demands is Corporate Social Responsibility Disclosure. It is comprehensible from an institutional theory standpoint. According to institutional theory, an organization must abide by institutional norms, expectations, and regulations in order to gain legitimacy and survive in its environment. Institutional forces have a significant impact on businesses' decisions to disclose information about their social and environmental activities under the Corporate Social Responsibility Disclosure (CSRD) framework (Gonçalves & Silva, 2021). 1.10 Introduction to Earning Persistence Earnings sustainability is one of the most important concepts in accounting, which measures the extent to which a company's current earnings predict its potential future earnings growth (Noureddine and Hamza, 2016). Earnings having this characteristic is essential for assessing the company's long-term stability and the possibility of relying on the company's earnings to predict the company's future earnings. In addition, it provides basic information and data that indicate the stability of the company's performance and the company's position in the long term (Ranasinghe et al., 2019). Earnings sustainability is also essential in decision-making for analysts, investors, stakeholders, and many others. Therefore, understanding the factors that affect earnings sustainability is of utmost importance for stakeholders and interested parties who want 13 to assess the financial health of a particular company or institution, forecast cash flows, and make decisions based on the historical performance of those companies (Al-Haddad & Al-Ghoul, 2023). The financial statement analysis discipline is closely related and interconnected with the discipline of earnings persistence (Vichitsarawong & Pornupatham, 2015). There are different approaches to be used by analysts, in order to identify trends in earnings trajectory for a company, including ratio analysis, trend analysis, and forecasting models. The degree of earnings persistence can be affected by various variables, mainly prevailing economic conditions, industry traits, accounting rules, as well as management choices (Dang & Vu, 2022). The complex world of financial markets can be easily navigated by stakeholder through an in-depth understanding of earnings persistence (Jia & Li, 2022). It is considered to be a helping tool to make well-informed investment and strategic decisions and to manage uncertainty and anticipate risks based on the historical performance of the entities they are considering (Liem, 2021). Financial Statement Analysis and Earnings Persistence The expectation that a company’s reported earnings will continue into the coming quarters is known as earnings persistence in the context of financial statement analysis. Analysts examine income statements to assess the accuracy and sustainability of reported earnings (Pirveli, 2020). Reliable earnings are an indicator of a company’s long-term profitability, which impacts investment and valuation decisions. However, irregular or inconsistent earnings can raise doubts in investors’ minds about the stability of a company’s performance. Finding trends in reported earnings, assessing the quality of earnings, and understanding how accounting rules affect reported earnings are all made easier with the help of financial statement analysis (Oktavia & Susanto, 2022). Understanding earnings persistence can be incorporated into financial statement analysis to help stakeholders be better prepared to forecast future financial success based on historical data (Dang & Vu, 2022). Hence, analyzing financial statements is essential to determining the performance and financial well-being of a business. Financial statement interpretation is a skill that analysts and investors use to get insights into a company's profitability, liquidity, solvency, and general operational efficiency (Dang & Vu, 2022). A quantitative 14 foundation for assessing several facets of a company's financial status is provided by common financial measures like leverage, profitability, and liquidity ratios (Ibrahim et al., 2015). Furthermore, the utilization of trend analysis, common-size analysis, and comparative analysis facilitates the comprehension of past performance and the identification of possible areas that require attention or improvement (Ndegwa, 2024). A detailed study of financial statements gives stakeholders a clear image of a company's financial status and performance over time, empowering them to make well-informed decisions about lending, investments, and strategic planning (Amidu & Harvey, 2016) Factors Affecting Earnings Persistence The continuity of profits is affected by a variety of internal and external factors. Dang & Van Vu (2022) shows that management practices have a significant impact on the continuity of profits, such that rational practices far from managing profits will help the company maintain the continuity of the company in achieving profits. Otherwise, practices that contribute to achieving profits in the short term, such as creative accounting practices and earnings management, will help the company show profits in the short term, but the company's fate is to incur huge financial losses in the long term, which may eventually lead it to declare bankruptcy and collapse (Oktavia & Susanto, 2022). Also, Oktavia & Susanto (2022) shows that practicing conservative accounting policies will help the company maintain the continuity of profits, such that the company, through these practices, anticipates the worst-case scenario and thus is sufficiently prepared to face future financial risks. On the other hand, Rajizadeh & Rajizadeh (2014) shows that some industries show more stable financial performance than other sectors. This can be explained by referring to the Corona pandemic incident. Although various economic sectors may have been affected by this pandemic, other sectors have achieved significant financial returns as a result of this pandemic, including the health sector (Suk et al., 2021). In addition, the real estate sector, for example, is one of the most stable sectors and therefore one of the sectors most capable of achieving continuity in generating profits, unlike unstable sectors such as investment funds (Pirveli, 2020). 15 Kyosev et al. (2020) also shows that profits are divided into low-quality and high- quality profits; the former are less indicative of future performance, while the latter are more likely to continue. Ibrahim et al. (2015) confirms that the level of financial leverage in the company is one of the most important internal factors affecting the continuity of profits, so that it is expected that companies that use a higher rate of financial leverage should provide higher returns on investment, in line with the rule that the increase in risk must be met with an increase in revenues. Wisudawati & Achyani (2022) shows that companies facing intense competition and market volatility have more stable and consistent earnings than those with market dominance and strong competitive advantages. In addition, companies facing changes or regulatory scrutiny show increased volatility, while companies that adhere to reporting requirements or regulatory standards may show stable earnings (Kyosev et al., 2020). Ibrahim et al. (2015) shows that investor expectations are among the external factors that may affect the earnings persistence, in addition to the significant impact of both rapid disruptions and technological progress and developments. 1.11 Literature Review and Hypothesis Development "Researchers and professionals in the fields of accounting and financial management are interested in corporate social responsibility and the comparability of accounting data. Given the efforts to improve corporate transparency and strike a balance between social and economic objectives, social responsibility disclosure is becoming more and more important. Simultaneously, the comparability of accounting data is thought to be a crucial component in aiding the management and investment decision-making process. In order to describe the relationship between social responsibility disclosure and accounting information comparability and their effect on profit continuity, a literature review will be carried out in this section of the study. This will be done by going over earlier research and examining the literature that has been done on the subject from a variety of angles, as well as by pointing out the various contexts that may have an impact on this relationship." 16 The relationship between CSRD and earnings persistence Companies are eager to reveal their financial reports in a completely honest and transparent manner since disclosure is one of the fundamental elements for their success and survival (Sukanantasak, 2014). The openness and lucidity of the financial data that businesses give to stakeholders are indicators of social responsibility (Khuong et al., 2022). One of the most crucial pillars of the quality of financial reports, and consequently of the quality of earnings and the company's capacity to maintain profits, is administrative openness and its ethical standards. According to Martínez-Ferrero et al. (2016), there is a positive correlation between social responsibility disclosure and profit continuity. These companies are also less likely to manipulate their operational activities and manage profits resulting from optional entitlements. Companies with a strong commitment to social responsibility are also better at forecasting future earnings than those with a weaker commitment (Boulhaga et al., 2022). As a result, stakeholders view businesses that engage in social responsibility as trustworthy since they reveal their earnings in an honest and ethical manner, improving their standing in the marketplace (Pham & Tran, 2020). Since financial reports are transparently given in accordance with the ethical perspective of social responsibility, businesses are less likely to manipulate earnings, which validates what is said in that perspective (Peifer et al., 2020). Contrary to the above, Pham & Tran (2020) believes that the motive of corporate management in practicing social responsibility is to achieve its own interest by concealing the profit management operations practiced by the company with the intention of showing its financial reports in a way that helps improve its reputation. Since companies that practice social responsibility are more likely to practice profit management, that is, there is a negative relationship between social responsibility and earnings persistence (Gaio et al., 2022). Based on the negative relationship between social responsibility and earning persistence, social responsibility is used opportunistically as a means to cover up profit management practices that represent short-term profits followed by huge losses and thus mislead stakeholders (Zulu, 2023). The proponents of the opportunistic perspective rely on the agency theory, which believes that managers use social responsibility for personal benefit away from the interests of the company and stakeholders (Zulu, 2023; Panda & Leepsa, 2017; Afza, 17 Ehsan, & Nazir, 2015; Lopes, 2016; Farooq, Khan, Kainat, & Mumtaz, 2024; Lahouirich & El Amri, 2024). As for the proponents of the ethical perspective, they believe that the stewardship theory came to compensate for the shortcomings of the agency theory, as it believes that the manager has a moral responsibility by nature, that is, he practices profit management less, and seeks to serve the company, stakeholders and society as a whole (Yuliandhari & Fadila, 2024; Jia & Li, 2022; Ehsan et al., 2022; Anagnostopoulou, 2024; Muttakin, Khan, & Azim, 2015). The researcher agrees with the ethical perspective that reflects the positive relationship between disclosure of social responsibility and the continuity of profits, i.e. whenever there is disclosure of social responsibility, this is a reason for the existence of quality in profits and thus a higher possibility of achieving continuity in profits, which shows its effect on investors and the extent of their confidence in the company (Yuliandhari & Fadila, 2024; Jia & Li, 2022; Ehsan et al., 2022; Anagnostopoulou, 2024; Muttakin, Khan, & Azim, 2015). However, practicing social responsibility and disclosing it for unethical purposes with the intention of manipulating profits and not showing them in their true form works to mislead the facts and deceive stakeholders, and is considered an unethical act intended only for the interest of the company's management without caring about the interest of stakeholders, as the profits mentioned in its financial reports are not real, unlike when the company's management practices social responsibility in an ethical manner with the intention of providing services to society and providing it with welfare, thus its financial statements appear in a more credible and transparent manner, which helps it attract customers and increase its reputation among companies (Zulu, 2023; Panda & Leepsa, 2017; Afza, Ehsan, & Nazir, 2015; Lopes, 2016). Based on the above, the researcher puts forward the first hypothesis in this study, which he formulates as follows: H1: There is a positive, significant effect of disclosure of social responsibility on the continuity of profits of Jordanian and Palestinian banks over 2012-2022 period. 18 The relationship between the comparability of accounting information and the earnings persistence One of the key tenets that improves the caliber of financial reports and boosts their value to decision makers is the comparability of accounting data (Torabi et al., 2024). It makes it possible for shareholders and investors to fairly and properly assess the performance of other businesses, which helps to increase transparency and decrease uncertainty (Hu et al., 2024). Comparability of accounting data has been linked to increased trust among investors, managers, and shareholders, which in turn reduces market volatility and improves cash flow stability and return continuity (Torabi, Dastgir, & Kiani, 2024; Nguyen, 2024; Lee & Lee, 2024; Jia & Li, 2022; Pirveli, 2020). According to Nguyen (2024), the implementation of International Financial Reporting Standards (IFRS) significantly enhanced the cross-border comparability of data between various businesses. Compared to enterprises that employ local standards, those who embrace these standards have demonstrated better levels of earnings persistence (Lee & Lee, 2024). This is because investors can analyze the material and it is clear, which increases their trust in the consistency of future returns. According to Torabi et al. (2024), businesses with high comparability in their financial reports are also less susceptible to changes brought on by economic shocks. This is because they are better able to present a stable and transparent picture of their earnings, which raises expectations for returns in the future. Corona et al. (2024) shows that the comparability of accounting information contributes to improving market efficiency, as it facilitates the process of analyzing companies' financial performance, which helps investors make informed investment decisions. Khuong et al. (2022) study showed that markets characterized by a high level of comparability witness more stable investment flows, which contributes to improving persistency of returns for listed companies. However, these benefits face challenges related to the variation in the interpretation of accounting standards between companies and different regions, as Khuong et al. (2022) indicated that cultural and regulatory factors may weaken the impact of comparability on the earnings persistence in some emerging markets. 19 Ibrahimi & El Baghdadi (2024) study emphasizes the importance of the comparability of accounting information as a key factor in supporting the persistence of returns by enhancing confidence, reducing volatility, and improving market efficiency. Murtezaj et al. (2024) emphasizes that achieving these benefits requires a sustained commitment to applying accounting standards in a uniform and fair manner. Based on the above, the researcher puts forward the second hypothesis for this study, which he formulates as follows: H2: There is a positive impact of accounting comparability on the continuity of profits of Jordanian and Palestinian banks over 2012-2022 period. 1.12 Comments on the Previous Studies Based on the previous review of previous studies, it is clear to us that there is a great diversity in viewpoints and results related to the impact of both accounting comparability and social responsibility disclosure on the continuity of profits. With regard to social responsibility disclosure, there is relative agreement among researchers who support the ethical perspective, as a large group of researchers Yuliandhari & Fadila, 2024; Jia & Li, 2022; Ehsan et al., 2022; Anagnostopoulou, 2024; Muttakin, Khan, & Azim, 2015 confirmed that disclosure practiced with integrity and transparency contributes to enhancing the confidence of investors and stakeholders, which is positively reflected in the continuity of profits. On the other hand, there are a number of researchers who adopted the opportunistic perspective, indicating that social responsibility may be used as a tool to manipulate financial results and improve the company's image at the expense of truth and transparency, which leads to short-term results that weaken the continuity of profits in the future (Zulu, 2023; Panda & Leepsa, 2017; Afza, Ehsan, & Nazir, 2015; Lopes, 2016; Farooq, Khan, Kainat, & Mumtaz, 2024; Lahouirich & El Amri, 2024). As for the comparability of accounting information, most studies have emphasized its importance in improving the quality of financial reports and supporting investors' decisions, which contributes to achieving the continuity of profits (Torabi, Dastgir, & Kiani, 2024; Nguyen, 2024; Lee & Lee, 2024; Jia & Li, 2022; Pirveli, 2020). However, regulatory and cultural challenges have shown a varying impact on achieving the full 20 benefits of comparability, especially in emerging markets that may face difficulties in applying accounting standards in a uniform and effective manner. By reviewing these studies, it becomes clear that the impact of social responsibility disclosure and comparability of accounting information depends largely on the organizational and cultural context of companies and markets. Commitment to ethical practices and uniform standards also plays a pivotal role in achieving maximum benefit from these factors. Accordingly, the researcher agrees on the importance of enhancing transparency and unifying the application of accounting standards as two basic pillars to improve the continuity of profits and enhance the confidence of investors and stakeholders. In light of this analysis, the researcher presents the study's two hypotheses based on the positive impact of both social responsibility disclosure and comparability of accounting information on the continuity of profits, while emphasizing the need for supportive ethical and organizational contexts to achieve these goals. 21 Chapter Two Methodology 2.1 Introduction. The current study aims to find out the impact of Corporate Social Responsibility Disclosure and Accounting Comparability (Liquidity Ratios, Profitability Ratios, Leverage Ratios, Activity Ratios) on Earnings Persistence. This chapter provides a description of the research methodology, the study population and its sample, the data collection, the model, the variables, the variable measurement mechanisms, the interpretation of the research model, and finally the statistical analysis methods used. Study population and sample The study population consists of all the banks listed on the Palestine Exchange And Amman Exchange; they are (7) Palestinian banks, and )14( Jordanian banks. A set of conditions were set for selecting the sample items as follows: 1. Five years or more have passed since the bank listed on the Palestine Exchange. 2. The bank continues to operate and has not been suspended from trading. Therefore, the study sample consisted of (7) banks listed on the Palestine Exchange and (14) other banks listed on the Jordanian Exchange. The following tables illustrate this, but Safa Bank and Safwa islamic Bank was excluded due to its recent listing on the Palestine Exchange and Amman exchange: Table 1 Distribution of banks listed on the Palestine Stock Exchange Number Name The Bank 1 Bank of Palestine 2 Al Quds Bank 3 Arab Islamic Bank 4 National Bank 5 Palestine Investment Bank 6 Palestinian Islamic Bank 7 Safa Bank 22 Table 2 Distribution of banks listed on the Jordanian Stock Exchange Number Name The Bank 1 Jordanian Islamic Bank 2 Jordanian Kwait Bank 3 Jordanian Commercial Bank 4 Arab Jordan Investment Bank 5 Safwa Islamic Bank 6 The Housing Bank for Trade and Finance 7 Bank Al Etihad 8 Arab Banking Corporation/ (Jordan) 9 Invest Bank 10 Capital Bank of Jordan 11 Cairo Amman Bank 12 Bank of Jordan 13 Jordan Ahli Bank 14 Arab Bank 2.2 Data Sources This study relies on the financial reports published by both the Palestine Stock Exchange and the Amman Stock Exchange as a primary source of data. The data for the study variables will be accessed by reviewing the financial reports of the banks included in the study sample for the period 2012-2022. 2.3 Measurement of Variables Independent Variables Accounting Comparability: Torabi et al. (2024) define the concept of comparability is interpreted as the ability of accounting information to be comparable between different economic entities within the same industry or across multiple industries, making it an essential tool for making economic decisions by investors, creditors, and regulators. Nguyen (2024) also defines comparability as the ability of financial statements to provide information that can be compared between different companies and across multiple time periods, which helps in evaluating the financial performance of companies fairly and accurately and making informed investment decisions. Temporal comparability, which compares an economic entity's performance over time, spatial comparability, which compares the performance of entities in different geographical locations, and sectoral comparability, which compares the performance of entities across multiple industrial sectors, are some of the key dimensions of this concept that "De Franco and Kothari identified (Lee & Lee, 2024)." 23 Since this indicator connects the company's performance as represented in net income to its performance in the market, many researchers will use the ratio of net income to market value of equity as a measurement method to assess accounting comparability (Chircop, 2024; Arianpoor & Efazati, 2024; Yang, Ying, & Xu, 2024; Corona, Huang, & Hwang, 2024). Furthermore, Jia & Li (2022) show that this measure is a helpful tool for evaluating how well companies perform in the marketplace and in terms of profitability, allowing for a more accurate comparison between different entities. Additionally, this measure facilitates the comparison of the stability of companies' financial outcomes (Corona et al., 2024). Chircop (2024) claims that this approach is used to evaluate accounting comparability because it precisely measures how much reported earnings are impacted by differences in accounting methods across companies. This method is the most often used for evaluating accounting comparability because it provides a means of evaluating the consistency of accounting data across different companies (Arianpoor & Efazati, 2024). Moreover, this approach provides flexibility in analyzing temporal implications and changes in accounting standards, which is essential for understanding the continuity of profits, especially in dynamic industries like banking in Jordan and Palestine, as shown by De Franco et al. (2011). "The AC of firm I in year t is empirically estimated using comparability and the methodology of De Franco and Kothari. First, the following equation is estimated using the data from the preceding 16 quarters:" "earnings = net income / equity market value at the beginning of the period". Earnings it = αi + βi . Return it +εit (1) The following formulas are used to forecast the earnings of enterprises I and J, assuming equal profit performance: E(Earnings) iit = αi + βi . Return it (2) E(Earnings) ijt = αj + βj. Return it (3) 24 The predicted income of firm i in year t is represented by E(Earnings) iit, whereas the projected income of firm j adopting firm j's method of recognizing firm i's profit in year t is shown by E(Earnings) ijt. The return of firm I is used in Equations (2) and (3) to ensure that the same is taken into account. Next, compute the mean of the absolute deviation between the two anticipated returns produced by firms I and J's accounting systems. Next, a negative value is assigned to the number, meaning that greater values of COMPACCTijt signify greater AC between the two firms: COMPACCT ijt = −1/16 ∗ ∑ t t−15 اE (Earningsiit) − E Earningsijt(4) ا To give the firm a comparative measure each year, the averages the COMPACCTijt values for firms i in year t. For the four j firms in year t, COMP4it is the average of the four highest COMPACCT scores. For every company in the same industry as firm i for the year t, COMPINDit is the average of COMPACCT. CSRD: It is the voluntary transparency initiatives taken by a company to convey its environmental, social, and ethical values. It entails informing relevant parties— investors, customers, staff members, and members of the public—about the company's dedication to moral corporate conduct, sustainability, community involvement, environmental effect, labor standards, and charity (Abdeljawad et al., 2021). It will be measured using a checklist that has been produced using the requirements standard This study used a disclosure index with thirty elements to measure CSRD. The objects were divided into four categories, as shown in Table 1 (environment, human, community, and products). Items that were disclosed were coded with a "1," otherwise a "0." The number of items disclosed by a bank divided by the total number of items (30) was used to calculate the disclosure ratings (Nour, Alia & Balout, 2022). These items were modified to take into account the CSRD policies of the banks in Palestine and Jordan as well as the conditions that exist there. 25 Table 3 CSRD disclosure index Items of CSRD disclosure A Environmental information 1 Bank policy toward the environment 2 Environmental protection programs contribution 3 Natural resources conservation 4 Environmental regulations and requirements compliance 5 Bank financial contributions to organizations operating in environmental protection field 6 Bank support and finances clean and alternative projects (Renewable) B human information 1 Break-down of the employees by executive & non-executive 2 Amount spent on training employees 3 Number of employees trained during the year 4 Education facilities 5 Information on employee benefits 6 Health arrangements 7 Safety arrangement 8 Holidays and vacations C Community involvement information 1 Donations to arts, sports, etc 2 Sponsoring educational seminars and conferences 3 Sponsoring students educational scholarship 4 Providing job opportunities and helping reducing unemployment rate 5 Conducting projects in poor areas 6 Providing Cash rewards 7 Participating and financing celebration: National/ religious 8 Other communities involvement D Products information 1 Glossary/definition of products 2 Involvement in non-permissible activities 3 Providing returns within Shariah principles 4 Responsiveness to customer complaints 5 Provides its banking services through technology and the Internet) 6 Competitive position of the bank 7 Research projects set up by the bank to improve its services 8 Bank liable for Zaka Note: (Nour, Alia, & Balout, 2022) 26 The items were divided into four categories, as shown in Table 1 (environment, human, community, and products). The index's items were chosen using the findings and justifications of the following previous studies (Barakat, Pérez & Ariza. (2015); Hassanein et al. (2008) & Alia & Branson (2011)). These were changed to take into account the conditions that exist in Jordan and Palestine as well as the banks' CSRD policies. Dependent Variable Persistence: The extent to which a business's profits over time continue to accurately reflect its underlying financial performance. It evaluates the profits stream consistency and predictability of a company. A high degree of earning persistence suggests that a business's profits are less impacted by sporadic or transient events and are mostly stable (Khuong et al., 2022). an EP statistic that can be found in the financial statement and is computed using various components. Upon performing an OLS regression on Equation (*), the coefficient β1, signifying the stability of income, is obtained. Earnings i,t+1 and Earnings are the earnings per share (EPS) of company i for years t + 1 and t, respectively, as calculated using the year t stock price (Yuliandhari & Fadila, 2024; Jia & Li, 2022; Pirveli, 2020). Earnings it= a + B₁*Earnings it + ε (*) (5) Control Variables 1. Firm Size: It is the measurement of a company's size or scope, usually based on variables like market capitalization, revenue, total assets, and number of employees. It is a crucial indication that assists in grouping companies according to their operational scope and financial parameters (Khuong, et al., 2022). It is typically measured by identifying the magnitude of a company's assets through the company's general balance sheet (Ramadan & Aloqda, 2011). 2. Cash: cash, expressed in cash and cash equivalents, as a percentage of total assets. Businesses with EP typically have a certain amount of cash on hand, suggesting a positive correlation between cash holdings and EP (Khuong et al., 2022). 3. Debt: The debt ratio variable (DEBT), which is used as a control variable because businesses with high debt ratios are more likely to have financial issues that affect 27 revenue levels, is calculated by dividing total debt by total assets (Khuong et al., 2022). 4. Dividend Yield: It is measured by dividing the annual payout by the market value of the shares. In an effort to attract investors, dividend yield responds to EP in a positive way (Khuong et al., 2022). 5. Net Interest Margin: It is the difference between the interest income a bank earns from loans and investments, and the costs it pays on deposits and other sources of funding. This indicator is expressed as a percentage of interest-earning assets, and is used to assess the efficiency of a bank in managing its interest-earning assets compared to its liabilities (Lehner et al., 2024; Khuong et al., 2022). 6. Provisioning for Loan Losses: It refers to the percentage of the provision for credit facilities impairment from the total credit facilities granted by the bank, and this variable shows the degree of credit risk that the bank bears, in addition to the fact that through this variable we can see the value of potential credit losses resulting from customers' default in repaying loans, and the degree of the bank's protection from credit risks and ensuring its financial stability (Lehner et al., 2024; Khuong et al., 2022). 7. Liquidity: It refers to the bank's ability to meet its short-term financial obligations, such as paying off debts or approving client withdrawal requests, using its easily accessible liquid assets, such as cash and securities. This variable will be measured using the ratio of liquid assets to total assets (Lehner et al., 2024; Khuong et al., 2022). 8. Capital adequacy ratio: "This ratio measures the bank's capital compared to its risky assets", and is one of the most important ways to assess the bank's commitment to risk mitigation and Basel Accord requirements, as this ratio is used to assess the bank's ability to withstand losses and avoid bankruptcy based on Basel Accord requirements (Lehner et al., 2024; Khuong et al., 2022). 9. Operational efficiency: This ratio represents the bank's ability to control its operating costs in order to generate income. This ratio is measured by dividing total operating expenses by revenues, and therefore the lower this ratio is, the better (Lehner et al., 2024; Khuong et al., 2022). 28 Control variables at the country level 1. Inflation: It is the continuous increase in the general level of prices of goods and services in an economy over a certain period of time, which leads to a decrease in the purchasing power of the currency and its impact on consumption and investment. Inflation is measured using indicators such as the Consumer Price Index (CPI) or the Producer Price Index (PPI), the growth rate in consumer prices will be relied upon to measure inflation. It is considered an important control variable in financial studies because it affects financial and accounting evaluations, including the value of assets, revenues, and costs. Inflation can also affect the sustainability of profits through its effect on production costs and selling prices (Lehner et al., 2024). 2. Gross domestic product (GDP): is the total value of all final goods and services produced within the borders of a given country during a given period of time, and is one of the most important indicators of economic performance because it reflects the volume of economic activity and the level of growth. GDP is used as an indicator of the general state of the economy, which affects the business environment and the earnings persistence. In accounting studies, GDP is used as a control variable to measure the impact of the general economic environment on the relationship between social responsibility disclosure, comparability of accounting information, and earnings persistence (Lehner et al., 2024), this variable would be measured by the growth in GDP. 29 Table 4 Summary table of study variables and methods of measuring them Type Variables Symbol Measurement References Independent Variable (1) Corporate Social Responsibility Disclosure CSR D In this study, CSRD was measured by a disclosure index contains 30 items. As seen in Table (1), the items were classified into 4 categories (environment, human, community and products). Disclosed items were coded with ‘1’, otherwise with ‘0’. (Nour, Alia, & Balout, 2022) Independent Variable (2) Accounting Comparability ACC-C The approach of De Franco and Kothari will be adopted by measuring the ratio of net income to equity market value at the beginning of the period. (Chircop, 2024; Arianpoor & Efazati, 2024; Yang, Ying, & Xu, 2024; Corona, Huang, & Hwang, 2024) Control Variable Firm Size SIZE Size shows the firm’s size as defined by the ln of Total Assets. (Khuong, et al., 2022) Cash CASH CASH as a percentage of total assets, as measured in cash and cash equivalents (Lehner et al., 2024; Khuong et al., 2022). Debt DEBT total debt is divided by total assets, we obtain the debt ratio variable (DEBT). (Lehner et al., 2024; Khuong et al., 2022). Dividend yield DIVY DIVY stands for dividend yield, which is calculated as the yearly payout divided by the stock’s market value. Dividend yield changes in a good manner in response to EP in order to entice investors. (Lehner et al., 2024; Khuong et al., 2022). Operational Efficiency CFI Total Expenses / Total Revenue (Lehner et al., 2024; Khuong et al., 2022). Capital adequacy Ratio CAR Capital ÷ Risk Weighted Assets (Lehner et al., 2024; Khuong et al., 2022). Net Interest Margin NIM (Interest Income−Interest Expense )/ Average Earning Assets (Lehner et al., 2024; Khuong et al., 2022). Liquidity LAT Current Assets / Total Assets (Lehner et al., 2024; Khuong et al., 2022). Provisioning for Loan Losses NPL Provision for Credit Facilities Imp airment/Total Credit Facilities Gr anted (Lehner et al., 2024; Khuong et al., 2022). Gross Domestic Product GDP GDP will be measured by the world bank indicator growth, (GDP1-GDP0/GDP1) (Lehner et al., 2024) Inflation INF inflation will be measured by the world bank indicator, CPI (Lehner et al., 2024) Dependent Variable Earning Persistence Pers an EP statistic that can be found in the financial statement (Yuliandhari & Fadila, 2024; Jia & Li, 2022; Pirveli, 2020) 30 2.4 Research Framework Figer 1 Research Model 2.5 The research model Understanding how different operational and financial variables interact to influence persistence outcomes across time is essential when evaluating factors impacting organizational persistence. We use an extensive research model that includes several predictors to address this. This model, as a baseline, has added the persistence lagged value, alongside some significant and crucial factors mainly, size of business, cash holdings, dividend yield, levels of debt, as well as CSR. Through the integration of these factors, the model aims to illustrate the ways in which each element, either alone or in combination, impacted the organizational behaviors longevity. The following equation is given as a way to consider these relationships (Khuong, et al., 2022): Persistenceit = β0 + β1COMPACCTit−1 + β2CSRit + β3SIZEit + β4CASH it +β5D IVYit + β7DEBTit + β8GDP+ β9INF+ β10LAT+ β11CFI+ β12NIM+ β13CAR+ Eit Dependent variable PERSISTENCE: it is a static that is computed using the elements existed all over the financial statement. The coefficient β1 is considered to be an income stability sign that is obtained following an OLS regression on Equation (*) Dependent Variable Earning Persistence Control variables Cash, Debt, Dividends yield, Size, GDP, Inflation, Operational Efficiency, Capital adequacy Ratio , Net Interest Margin , Liquidity , Provisioning for Loan Losses Independent variable Accounting Comparability, Corporate Social Responsibility 31 “Earningsi,t+1 = α + β1 ∗ Earningsi,t + ε (∗)” (6) Independent variables COMPACCT: Comparability is applied to empirically estimate the AC of firm i in year t. First, the data from the previous 16 quarters are used to estimate the following equation: earnings = net income / equity market value at the beginning of the period. Equation (1) uses the stock's quarterly return as the return. 1. “Earningsit = αi + βi .Returnit + εit” Based on the assumption of equal profit performance, the following formulas are utilized to predict the earnings of firms I and J: 2. “E(Earnings) iit = αi + βi .Returnit” 3. “E(Earnings) ijt = α j + β j .Returnit” While E(Earnings) ijt indicates the predicted income of company j using firm j's technique for recognizing firm i's profit in year t, E(Earnings) iit represents the expected income of firm i in year t. To make sure that the return of firm I is considered, it is used in Equations (2) and (3). After that, average the absolute difference between the two projected returns produced by firms I and J's accounting systems. After that, the number is given a negative value, meaning that higher COMPACCTijt values correspond to greater AC between the two firms: 4. “COMPACCTijt = −1/16 ∗ ∑ t t−15 E (Earningsiit) − E Earningsijt)” To give a comparison measure for that firm in each year, the averages the COMPACCTijt values for firms i in year t. The average of the four highest COMPACCT values for each of the four j firms in year t is called COMP4it. The average of COMPACCT for all companies in the same industry as company I for the year t is called COMPINDit. The social responsibility disclosure score for economic, environmental, and social acts is called CSR: CSR ECONOMIC; CSR ENVIRONMENT; and CSR SOCIAL. The corresponding score is called CSR ALL. The calculation formula is as follows: 5. “CSR_ECONOMICi = ∑ Xi *ni” 32 6. “CSR_ ENVIRONMENT = ∑ Xi *ni” 7. “CSR_ SOCIAL = ∑ Xi *ni” 8. “CSR_All = ∑ Xi *ni” Control Variable The control variables used in the model include Debt Ratio (DEBT), represented by DEBT, Cash (CASH), represented by CASH, Dividend Yield (DIVY), represented by DIVY, Gross Domestic Product (GDP), represented by GDP, and Inflation (INF), represented by INF. Additionally, the model includes Bank Size (SIZE), represented by SIZE, Operational Efficiency (CFI), represented by CFI, Capital Adequacy Ratio (CAR), represented by CAR, Net Interest Margin (NIM), represented by NIM, Liquidity (LAT), represented by LAT, and Provisioning for Loan Losses (NPL), represented by NPL. While taking into consideration the effects of other variables, these control variables aid in the explanation of the correlations between the independent and dependent variables. 2.6 Statistical Procedures 2.6.1 Statistical Description A statistical description of the study variables will be conducted, including measures of central tendency (such as mean and median) and measures of dispersion (such as standard deviation, highest and lowest values), for both Palestinian and Jordanian banks separately. This procedure aims to compare the study variables between the Palestinian banking sector and the Jordanian banking sector comprehensively. 2.6.2 Correlation Matrix A correlation matrix will be created to analyze the strength of the relationship between the different variables in the study, in addition to conducting the Multicollinearity Test to verify the presence or absence of multicollinearity, to ensure the accuracy of the analysis and regression. 33 2.6.3 Multiple Linear Regression Multiple linear regression will be applied to the study data using Panel Data. The three linear regression models will be used: the pooled model, the random effects model, and the fixed effects model. After that, both the Breusch-Pagan test and the Hausman test will be conducted to determine the most appropriate and accurate model. Based on the chosen model, the study hypotheses will be tested and the nature of the impact of the independent and control variables on the dependent variable will be analyzed. 34 Chapter Three Research Analysis and Results 3.1 Descriptive statistics of the study variables For both Palestinian and Jordanian banks independently, a statistical description of the research variables will be carried out, including measures of central tendency (like mean and median) and measures of dispersion (like standard deviation, highest and lowest values). The goal of this process is to conduct a thorough comparison of the research variables between the banking industries in Jordan and Palestine. Descriptive Statistics for Palestinian Banks The financial and operational performance of Palestinian banks from 2012 to 2022 is thoroughly examined in this section." CSRD, Accounting Comparability, Bank Size (Total Assets), Debt Ratio, Cash Ratio, Dividend Yield, Earnings Per Share (EPS), Operational Efficiency (CFI), Capital Adequacy Ratio (CAR), Net Interest Margin (NIM), Liquidity (LAT), Provisioning for Loan Losses (NPL), and macroeconomic indicators" like GDP and INF are among the important variables that are the focus of the analysis. These indicators provide information about the flexibility, efficiency, and stability of banks in Palestine's particular economic climate. 35 Table 5 Descriptive Statistics for Palestinian Banks ACCC CAR CASH CIR CSRD DY EP GDP INF LAT NIM NPL SIZE DE 1.667083 0.196359 0.232774 0.230133 0.447527 0.701277 0.126909 0.050466 0.067521 0.982779 0.087313 0.005479 9.032503 0.77094 Mean 0.892086 0.107097 0.201610 0.224269 0.483889 0.857387 0.121500 0.050013 0.065243 0.983764 0.031775 0.005033 9.021871 0.62682 Median 15.27002 58.27601 2.327253 0.352595 0.833300 0.925381 0.290000 0.142321 0.077566 0.997755 1.163228 0.015846 9.813462 0.945627 Max -0.419854 0.052561 0.011513 0.157054 0.033300 0.310375 -0.07 -0.10313 0.060515 0.965258 -0.252603 0.000000 8.412779 0.23567 Min 2.481531 7.159173 0.267695 0.038494 0.219306 0.248596 0.073572 0.064529 0.005702 0.006993 0.181982 0.003812 0.353961 0.334256 Std. Dev. 66 66 66 66 66 66 66 66 66 66 66 66 66 66 Obs. 36 The factors employed in the study, with a particular focus on Palestinian banks, are statistically described in the table above. It highlights the main statistical characteristics of the variables, including the mean, median, maximum, minimum values, and standard deviation. Looking at the data, there is noticeable variation in the financial and administrative performance of Palestinian banks. Starting with Accounting Comparability (ACC_C), the mean value of 1.667 reflects a moderate level of comparability among banks. However, the maximum value of 15.27 indicates that some banks excel significantly in this aspect, while the negative minimum value (-0.42) reveals considerable weakness in others, potentially impacting transparency and investor trust. The high standard deviation (2.48) underscores significant disparities in this metric. For Capital Adequacy Ratio (CAR), the mean value of 0.196 indicates that Palestinian banks generally meet regulatory requirements for capital adequacy. However, the maximum value of 58.27 reflects exceptional cases of banks with very strong capital levels, while the minimum value (0.052) highlights risks faced by some banks that need to strengthen their capital. The high standard deviation (7.15) reflects considerable variation in this area. In terms of Cash (CASH), the mean value of 0.232 suggests that Palestinian banks maintain moderate liquidity levels, which indicates stability in meeting short-term obligations. The maximum value (2.32) highlights banks with high cash reserves, while the minimum value (0.011) reflects very low liquidity, potentially exposing some banks to operational risks. Regarding Operational Efficiency (CIR), measured by the ratio of operating expenses to revenues, the mean value of 0.230 indicates relatively good efficiency. Lower values (minimum 0.157) demonstrate high efficiency in some banks, whereas higher values (maximum 0.352) highlight inefficiencies in others, signaling the need for operational improvements. For Corporate Social Responsibility Disclosure (CSRD), the mean value of 0.447 suggests moderate attention to CSR among Palestinian banks. The maximum value (0.833) indicates strong commitment to CSR practices by some banks, while the 37 minimum value (0.033) reflects significant shortcomings in this area, which could harm public perception and societal trust. The Dividend Yield (DY) shows a mean of 0.701, reflecting a generally good return level. However, the maximum value (0.925) indicates strong performance by some banks, while the minimum value (0.310) reflects weaker dividend distribution practices in others. Turning to Earnings Persistence (EP), the dependent variable in this study, the mean value of 0.126 suggests overall continuity of earnings, albeit at a relatively low level. The minimum value (-0.07) indicates losses in some banks, while the maximum value (0.29) reflects sustained profitability in others. For Gross Domestic Product (GDP) in Palestine, the mean value of 0.050 indicates limited economic growth. The minimum value (-0.103) points to periods of economic contraction, such as during the COVID-19 pandemic, while the maximum value (0.142) reflects moments of improvement in economic performance. Inflation (INF) in Palestine has a mean of 0.067, indicating relative price stability, with minor fluctuations as shown by a limited range between the minimum and maximum values. Bank Liquidity (LAT) stands out with a high mean of 0.982, demonstrating the strong ability of Palestinian banks to meet short-term obligations. The narrow range between the minimum (0.965) and maximum (0.997) values suggests stability across the sector in this metric. The Net Interest Margin (NIM) shows a mean value of 0.087, indicating a low margin, possibly due to competitive pressures or challenges in generating interest income. Similarly, Non-Performing Loan Provisions (NPL) exhibit an extremely low mean (0.005), reflecting effective credit risk management, though negative minimum values (- 0.008) could signal errors or reversals in provisions. With a low standard deviation indicating relative stability in bank sizes, the mean value of 9.032 for bank size (SIZE) indicates a balanced average size for Palestinian banks. 38 With a mean of (77%), the last control variable," Debt Dependence (DE), emphasizes the heavy reliance on debt as a major source of finance for operations and investments." In general, the data shows that Palestinian banks do well when it comes to capital adequacy and liquidity. However, there are notable variations in other aspects, such as CSR disclosure and operational efficiency. There are opportunities to enhance these areas, together with interest margins and profits persistence, in order to boost stability and sustainability in the banking sector. Descriptive Statistics for Jordanian Banks This statistical description represents the data for Jordanian banks 2012-2022. The previous table includes social responsibility disclosure (CSRD), accounting comparability, bank size (total assets), debt ratio, cash ratio, dividend yield, earnings per share (EPS), operational efficiency (CFI), capital adequacy ratio (CAR), net interest margin (NIM), liquidity (LAT), provisions for loan losses (NPL), and macroeconomic indicators, namely GDP and inflation index (INF). 39 Table 6 Descriptive Statistics for Jordanian Banks ACCC CAR CASH CIR CSRD DY EP GDP INF LAT NIM NPL SIZE DE 5.580946 0.080912 0.217207 0.303651 0.432886 3.56 0.269769 2.398759 1.990681 0.578893 0.100634 0.005092 9.269659 0.600052 Mean 2.434479 0.160374 0.207630 0.304254 0.433000 2.482 0.213000 2.400000 2.900000 0.581626 0.105637 0.004946 9.398460 0.609504 Median 53.53 0.976 0.59 0.35 0.900 18.22 0.32 44.0 4.80 0.79 1.16 0.02 10.4 0.94 Max -3.502427 0.017260 0.13556 0.181295 0.033000 0.000000 0.011000 -11.5 -2.3 0.439166 -0.252603 -0.008317 7.659408 0.009216 Min 8.180020 4.898183 0.050684 0.033561 0.208949 1087121. 0.211943 4.404576 2.260703 0.012359 0.143139 0.004440 0.525896 0.233261 Std. Dev. 140 140 140 140 140 140 140 140 140 140 140 140 140 140 Observ. 40 The above table provides a statistical description of the independent, control, and dependent variables for Jordanian banks. The previously carried out study may be used to ascertain the statistical characteristics of each variable, including measures of central tendency (mean and median) and measures of dispersion (standard deviation, maximum, and lowest values for each variable).Numerous financial and administrative metrics show notable variation among Jordanian banks, according to the data. For Accounting Comparability (ACC_C), the mean value of 5.58 indicates substantial variability among banks, as evidenced by the high standard deviation (8.18). The maximum value (53.53) suggests that some banks achieve a very high level of accounting comparability, while the negative minimum value (-3.50) reflects significant weaknesses or issues in accounting comparability for other banks. Regarding the control variable Capital Adequacy Ratio (CAR), the mean value of 0.08 suggests generally adequate levels of capital, aligned with the requirements set by the Basel Accord. The median (0.16) indicates that approximately half of the banks maintain capital adequacy levels above the average. The maximum value (0.97) highlights banks with a high capital adequacy ratio, whereas the minimum value (0.01) points to banks in the Jordanian banking sector that fall short of the Basel requirements, thus facing substantial risks. For Cash (CASH), the mean value of 0.217 indicates a relatively low proportion of cash to total assets. However, the maximum value (0.59) reflects some banks holding high levels of cash, while the minimum value (0.13) suggests low liquidity levels, exposing certain banks to financial risks. In terms of Operational Efficiency (CIR), measured by the ratio of operating expenses to revenues, the mean value of 0.30 suggests moderate efficiency levels. The minimum value (0.18) reflects high efficiency in some banks, while the maximum value (0.35) indicates weaker efficiency in others, underscoring the need for operational improvements. For Corporate Social Responsibility Disclosure (CSRD), an independent variable in this study, the mean value of 0.43 indicates a moderate level of disclosure, with noticeable variability among banks as evidenced by the standard deviation (0.20). The maximum 41 value (0.90) suggests strong CSR disclosure practices in some banks, while the minimum values highlight a clear weakness in this area for others. With regard to Dividend Yield (DY), the mean value of 3.56 appears moderate, while the median (2.48) shows that most banks report yields below the mean. The maximum value (18.22) reflects considerable variability in dividend distribution among Jordanian banks. For Earnings Persistence (EP), the dependent variable in this study, the mean value of 0.27 suggests a general trend of sustained earnings. The minimum value (0.01) indicates weak earnings for some banks, while the maximum value (0.32) reflects strong earnings sustainability in others. Concerning Jordan's Gross Domestic Product (GDP), the mean value of 2.39 suggests positive economic growth. However, the minimum value (-11.5) reflects periods of economic recession, while the standard deviation (4.40) highlights significant fluctuations in economic growth. For Inflation in Jordan (INF), the mean value of 1.99 indicates relative price stability. However, the minimum value (-2.3) points to deflationary periods, while the maximum value (4.8) represents periods of higher inflation. Bank Liquidity (LAT) shows a mean value of 0.57 and a median of 0.58, indicating relatively stable liquidity levels. The minimum value (0.43) and the maximum value (0.79) reveal slight variations in liquidity among banks. For Net Interest Margin (NIM), the mean value of 0.10 reflects a generally low margin, with slight variability as indicated by the standard deviation (0.14). Meanwhile, Debt Ratio (DE) has a mean value consistent with the banks' reliance on deposits as a primary funding source, which