Bank Competition and Borrower Conservatism

• 成果类型: Article
• 署名作者: Hou, Liya; Liang, Yi; Basu, Sudipta
• 署名单位: Minnesota State Colleges & Universities; Saint Cloud State University; University of Virginia; Pennsylvania Commonwealth System of Higher Education (PCSHE); Temple University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2021-0222
• 发表日期: 2023
• 页码: 247-275
• 关键词: ACCOUNTING CONSERVATISM; asymmetric timeliness; unconditional conservatism; institutional investors; corporate governance; disclosure evidence; Market competition; credit competition; reporting quality; loss recognition

摘要

We study the influence of bank competition on U.S. public borrowers' accounting conservatism by exploiting the staggered adoption of the Riegle-Neal Interstate Banking and Branching Efficiency Act (IBBEA) of 1994, which increased the threats of new bank entrants and actual bank entry. We find that borrowers' conditional conservatism fell after IBBEA. Conservatism fell more for firms located in states with weak incumbent banks and states with more out-of-state entrants, especially entrants with better monitoring technologies. The decrease in conservatism partially stems from borrowers' increased investment and risk-taking incentives. Conservatism fell more for firms relying more on bank loans, especially those that borrowed loans for the first time after IBBEA and for firms having lower dedicated institutional ownership and board independence. We also find that loans included fewer covenants and that bank loan borrowers became less likely to choose Big N auditors and industry specialist auditors after IBBEA.