Hands in the Cookie Jar: Exploiting Loan Loss Provisions under Bank Financial Distress

Malek El Diri; Timothy King; Laima Spokeviciute; Jonathan  Williams

doi:10.1016/j.econlet.2021.110098

Hands in the Cookie Jar: Exploiting Loan Loss Provisions under Bank Financial Distress

Malek El Diri
, Timothy King
, Laima Spokeviciute
, Jonathan Williams

Ysgol Busnes Albert Gubay

University of Kent
School of Geography, University of Leeds, UK
School of Healthcare Sciences, Cardiff University

Allbwn ymchwil: Cyfraniad at gyfnodolyn › Erthygl › adolygiad gan gymheiriaid

46 Wedi eu Llwytho i Lawr (Pure)

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We investigate earnings management (EM) behaviour at failed banks by examining the intensity and direction of EM around FDIC-insured commercial bank failures. Our empirical analysis indicates that failing banks engage in EM to a significantly greater extent than non-failing banks. Our results show that failing banks’ discretion over loan loss provisions ranges from aggressive (upwards EM) to conservative (downwards EM).

Iaith wreiddiol	Saesneg
Rhif yr erthygl	110098
Cyfnodolyn	Economics Letters
Cyfrol	209
Dyddiad ar-lein cynnar	6 Hyd 2021
Dynodwyr Gwrthrych Digidol (DOIs)	https://doi.org/10.1016/j.econlet.2021.110098
Statws	Cyhoeddwyd - Rhag 2021

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10.1016/j.econlet.2021.110098

2021 Hands in the cookie jarLlawysgrif awdur wedi’i dderbyn, 357 KBTrwydded: CC BY-NC-ND

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@article{7a37d702ab0a453a8082b554dd3bf748,

title = "Hands in the Cookie Jar: Exploiting Loan Loss Provisions under Bank Financial Distress",

abstract = "We investigate earnings management (EM) behaviour at failed banks by examining the intensity and direction of EM around FDIC-insured commercial bank failures. Our empirical analysis indicates that failing banks engage in EM to a significantly greater extent than non-failing banks. Our results show that failing banks{\textquoteright} discretion over loan loss provisions ranges from aggressive (upwards EM) to conservative (downwards EM).",

keywords = "Earnings Management, Bank failures, Banks",

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doi = "10.1016/j.econlet.2021.110098",

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T1 - Hands in the Cookie Jar: Exploiting Loan Loss Provisions under Bank Financial Distress

AU - El Diri, Malek

AU - King, Timothy

AU - Spokeviciute, Laima

AU - Williams, Jonathan

N1 - 18 months embargo

PY - 2021/12

Y1 - 2021/12

N2 - We investigate earnings management (EM) behaviour at failed banks by examining the intensity and direction of EM around FDIC-insured commercial bank failures. Our empirical analysis indicates that failing banks engage in EM to a significantly greater extent than non-failing banks. Our results show that failing banks’ discretion over loan loss provisions ranges from aggressive (upwards EM) to conservative (downwards EM).

AB - We investigate earnings management (EM) behaviour at failed banks by examining the intensity and direction of EM around FDIC-insured commercial bank failures. Our empirical analysis indicates that failing banks engage in EM to a significantly greater extent than non-failing banks. Our results show that failing banks’ discretion over loan loss provisions ranges from aggressive (upwards EM) to conservative (downwards EM).

KW - Earnings Management

KW - Bank failures

KW - Banks

U2 - 10.1016/j.econlet.2021.110098

DO - 10.1016/j.econlet.2021.110098

M3 - Article

SN - 0165-1765

VL - 209

JO - Economics Letters

JF - Economics Letters

M1 - 110098

ER -

Hands in the Cookie Jar: Exploiting Loan Loss Provisions under Bank Financial Distress

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