Accounting-Driven Bank Monitoring and Firms' Debt Structure: Evidence from IFRS 9 Adoption

• 成果类型: Article
• 署名作者: Li, Xiao; Ng, Jeffrey; Saffar, Walid
• 署名单位: Central University of Finance & Economics; University of Hong Kong; Hong Kong Polytechnic University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.4628
• 发表日期: 2024
• 关键词: IFRS 9; loan loss recognition; monitoring; debt structure; loan contracting

摘要

International Financial Reporting Standard (IFRS) 9 is of practical relevance to banks because it requires intense monitoring of borrowers to record timely loan losses. Using data from 50 countries, we find that accounting-driven bank monitoring due to IFRS 9 adoption reduces firms' reliance on bank debt relative to public debt. This finding is consistent with firms experiencing more costly bank monitoring after a shift in regulatory reporting that requires banks to monitor borrowers more intensely. In further analyses, we find that the negative effect of IFRS 9 adoption on bank debt reliance is more pronounced with more stringent regulatory supervision of banks, consistent with regulatory stringency exacerbating costly bank monitoring for firms. We also find that the negative effect is stronger when firms can more easily switch from bank debt to public debt financing, consistent with the relevance of switching costs in firms' decisions to avoid costly bank monitoring.