Journal article 43 views
Does the Change in Accounting Requirements on Banks Affect Borrowers' Earnings Management? Evidence from FAS 166/167
Suntina Sun 
,
Wei Song,
Qingjing Zhang,
Zhuang Zhang
,
Wei Song,
Qingjing Zhang,
Zhuang Zhang
Review of Quantitative Finance and Accounting, Volume: forthcoming
Swansea University Author:
Suntina Sun
Abstract
We examine whether and how changes in bank accounting standards influence borrowers’ earnings management activities. Exploiting the implementation of FAS 166/167, which required banks to consolidate previously off-balance-sheet securitized assets, we find that borrowing firms increase their use of a...
| Published in: | Review of Quantitative Finance and Accounting |
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| Published: |
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| URI: | https://cronfa.swan.ac.uk/Record/cronfa71893 |
| Abstract: |
We examine whether and how changes in bank accounting standards influence borrowers’ earnings management activities. Exploiting the implementation of FAS 166/167, which required banks to consolidate previously off-balance-sheet securitized assets, we find that borrowing firms increase their use of accrual-based earnings management following the reform. This effect is notably stronger among borrowers with greater financing needs and higher information opacity. Overall, our study documents a previously underexplored spillover effect of bank accounting reforms on borrowers’ accounting practices and underscores the importance of considering possible borrower-level responses when evaluating future accounting reforms in the banking sector. |
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| College: |
Faculty of Humanities and Social Sciences |