Hands in the Cookie Jar: Exploiting Loan Loss Provisions under Bank Financial Distress
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- 2021 Hands in the cookie jar
Accepted author manuscript, 357 KB, PDF document
Licence: CC BY-NC-ND Show licence
DOI
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).
Keywords
- Earnings Management, Bank failures, Banks
| Original language | English |
|---|---|
| Article number | 110098 |
| Journal | Economics Letters |
| Volume | 209 |
| Early online date | 6 Oct 2021 |
| DOIs | |
| Publication status | Published - Dec 2021 |
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