Article Title

PRUDENTIAL REGULATORY REGIMES, ACCOUNTING STANDARDS, AND EARNINGS MANAGEMENT IN THE BANKING INDUSTRY

Authors

Ali Ashraf, Frostburg State University - USAFollow
M. Kabir Hassan, University of New Orleans - USAFollow
Kyle J. Putnam, Linfield College - USAFollow
Arja Turunen-Red, University of New Orleans - USAFollow

Document Type

Article

Abstract

We analyze if a change in accounting standard or a change in prudential regulationimpacts banks’ loan loss provision. We find that, in general, the banks using aprinciples-based accounting standard exhibit a lower level of earnings managementcompared to banks using a rules-based accounting standard. When a country movesfrom pro-cyclical macro-prudential regulations to a dynamic provisioning regime,banks are more likely to set aside a larger amount of loan loss provision for the purposeof income smoothing.

Recommended Citation

Ashraf, Ali; Hassan, M. Kabir; Putnam, Kyle J.; and Turunen-Red, Arja (2019) "PRUDENTIAL REGULATORY REGIMES, ACCOUNTING STANDARDS, AND EARNINGS MANAGEMENT IN THE BANKING INDUSTRY," Bulletin of Monetary Economics and Banking: Vol. 21: No. 3, Article 3.
DOI: https://doi.org/10.21098/bemp.v21i3.975
Available at: https://bulletin.bmeb-bi.org/bmeb/vol21/iss3/3

First Page

367

Last Page

394