The Role of Bank Reputation in Certifying Future Performance Implications of Borrowers' Accounting Numbers

• 成果类型: Article
• 署名作者: Bushman, Robert M.; Wittenberg-Moerman, Regina
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/j.1475-679X.2012.00455.x
• 发表日期: 2012
• 页码: 883-930
• 关键词: initial public offerings; financial intermediation; Information production; corporate governance; investment banking; earnings quality; FIRMS; equity; CHOICE; determinants

摘要

We investigate the role played by the reputation of lead arrangers of syndicated loans in mitigating information asymmetries between borrowers and lenders. We hypothesize that syndications by more reputable arrangers are indicative of higher borrower quality at loan inception and more rigorous monitoring during the term of the loan. We investigate whether borrowers with more reputable lead arrangers realize superior performance subsequent to loan origination relative to borrowers with less reputable arrangers. We further examine whether certification by high-reputation lead banks extends to the quality of borrowers reported accounting numbers. Controlling for endogenous matching of borrowers and lead banks, we find that higher bank reputation is associated with higher profitability and credit quality in the three years subsequent to loan initiation. We also show that bank reputation is associated with long-run sustainability of earnings via higher earnings persistence, and debt contracting value of accounting via a stronger connection between pre-loan profitability and future credit quality. We further document that the enhanced earnings sustainability associated with higher reputation lead banks reflects both superior fundamentals and accruals more closely linked with future cash flows.