Audit Committee Members' Reputation Incentives and Their Effectiveness in Monitoring the Financial Reporting Process
In: Abacus, Band 56, Heft 3, S. 348-406
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In: Abacus, Band 56, Heft 3, S. 348-406
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In: Journal of Business Finance & Accounting. DOI:10.1111/jbfa.12643
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In: International Journal of Auditing, Band 24, Heft 3, S. 366-395
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In: Journal of Empirical Legal Studies, forthcoming
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Working paper
In: AAA 2018 Management Accounting Section Midyear Meeting
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Working paper
In: Journal of accounting and public policy, Band 33, Heft 4, S. 372-390
ISSN: 0278-4254
In: International Journal of Accounting, Forthcoming
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In: Journal of Contemporary Accounting & Economics, Forthcoming
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Working paper
In: JCAE-D-24-35
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In: The International Journal of Accounting, Forthcoming
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In: 28th Australasian Finance and Banking Conference
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Working paper
In this paper, we examine the role of information sharing and borrower legal rights in affecting the procyclical effect of bank loan loss provisions. Based on a sample of Asian banks, our empirical results highlight that higher non-discretionary provisions reduce loan growth and hence, non-discretionary provisions are procyclical. A closer investigation suggests that better information sharing through public credit registries managed by central banks, but not private credit bureaus managed by the private sector, might substitute the role of a dynamic provisioning system in mitigating the procyclicality of non-discretionary provisions. We also document that higher discretionary provisions in countries with stronger legal rights of borrowers may temper the procyclical effect of non-discretionary provisions. However, these findings only hold for small banks. This suggests that the implementation of a dynamic provisioning system to mitigate the procyclicality of non-discretionary provisions is more crucial for large banks, because such procyclicality cannot be offset by strengthening credit market environments through better information sharing and legal rights of borrowers.
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In this paper, we examine the role of information sharing and borrower legal rights in affecting the procyclical effect of bank loan loss provisions. Based on a sample of Asian banks, our empirical results highlight that higher non-discretionary provisions reduce loan growth and hence, non-discretionary provisions are procyclical. A closer investigation suggests that better information sharing through public credit registries managed by central banks, but not private credit bureaus managed by the private sector, might substitute the role of a dynamic provisioning system in mitigating the procyclicality of non-discretionary provisions. We also document that higher discretionary provisions in countries with stronger legal rights of borrowers may temper the procyclical effect of non-discretionary provisions. However, these findings only hold for small banks. This suggests that the implementation of a dynamic provisioning system to mitigate the procyclicality of non-discretionary provisions is more crucial for large banks, because such procyclicality cannot be offset by strengthening credit market environments through better information sharing and legal rights of borrowers.
BASE