Did the SEC impact banks' loan loss reserve policies and their informativeness?

• 成果类型: Article
• 署名作者: Beck, Paul J.; Narayanamoorthy, Ganapathi S.
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2013.06.002
• 发表日期: 2013
• 关键词: loss provisions; REGRESSION-COEFFICIENTS; COMMERCIAL-BANKS; earnings; DISCLOSURES; taxes

摘要

During the late 1990s, the SEC alleged that banks were overstating loan loss allowances to establish cookie jar reserves. Their intervention in bank accounting culminated in 2001 with new guidance (SAB 102) designed to improve financial reporting quality. We show that banks' allowance estimation changed in response to the SEC's intervention. While allowance informativeness (as proxied by the ability to explain future losses) improved for Strong Banks, informativeness declined for Weak Banks whose incentives are to understate allowances. Our results help to explain why some (Weak) banks delayed loss recognition during the recent financial crisis. (C) 2013 Elsevier B.V. All rights reserved.