Disclosure Regulation in the Commercial Banking Industry: Lessons from the National Banking Era

Granja, João

doi:10.1111/1475-679x.12193

Cited by 95 publications

(39 citation statements)

References 80 publications

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“…This view is consistent with our discussion of the destabilizing effects of debt and risk overhangs in the introduction. This view is supported by Granja's [2015] findings that the imposition of disclosure regulation for the state banks operating in a state reduced the failure rate of those banks relative to the national banks operating in the same state and to the state banks operating in contiguous states. This view is also supported by Costello, Granja, and Weber's [2015] finding that more effective bank regulators require higher bank transparency.…”

Section: Academic Debate About Bank Opacity and Stabilitymentioning

confidence: 86%

Banks’ Financial Reporting and Financial System Stability

Acharya

Ryan

2016

J of Accounting Research

291

152

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The use of accounting measures and disclosures in banks’ contracts and regulation suggests that the quality of banks’ financial reporting is central to the efficacy of market discipline and nonmarket mechanisms in limiting banks’ development of debt and risk overhangs in economic good times and in mitigating the adverse consequences of those overhangs for the stability of the financial system in downturns. This essay examines how research on banks’ financial reporting, informed by the financial economics literature on banking, can generate insights about how to enhance the stability of the financial system. We begin with a foundational discussion of how aspects of banks’ accounting and disclosures may affect stability. We then evaluate representative papers in the empirical literature on banks’ financial reporting and stability, pointing out the research design issues that empirical accounting researchers need to confront to develop well‐specified tests able to generate reliably interpretable findings. To this end, we provide examples of settings amenable to addressing these issues. We conclude with considerations for accounting standard setters and financial system policy makers.

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Section: Academic Debate About Bank Opacity and Stabilitymentioning

confidence: 86%

Banks’ Financial Reporting and Financial System Stability

Acharya

Ryan

2016

J of Accounting Research

291

152

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“…Prior research finds that incumbents oppose regulatory regimes that undermine their competitive position and advocate for regulation that protects their position. For example, Rajan and Zingales (2003) and Granja (2016) find that incumbent firms oppose disclosure regimes that make it easier for new entrants to raise capital as it fosters competition. A regulatory solution needs to be designed such that it serves the public interest rather than special interests.…”

Section: Special Interests Versus Public Interestsmentioning

confidence: 99%

Why regulate private firm disclosure and auditing?

Minnis

Shroff

2017

Accounting and Business Research

180

122

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Private firms face differing financial disclosure and auditing regulations around the world. In the United States and Canada, for example, private firms are generally neither required to disclose their financial results nor have their financial statements audited. By contrast, many firms with limited liability in most other countries are required to file at least some financial information publicly and are also required to have their financial statements audited. This paper discusses and analyzes the reasons for differential financial reporting regulation of private firms. We first discuss various definitions of a private firm. Next, we examine theoretical arguments for regulating the financial reporting of these firms, particularly related to public disclosure and auditing. We then provide new survey based evidence of firms' and standard setters' views of regulation. We conclude by identifying future research opportunities.

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“…These are first-order policy questions (see also Acharya and Ryan 2016). Again, there is nascent research on these topics (e.g., Bushman and Williams 2015, Domikowsky et al 2017, Granja 2018, but currently we are not able to answer these important policy questions.…”

Section: A Brief Digression: Opportunities For Future Accounting Resementioning

confidence: 99%

Evidence-Based Policymaking: Promise, Challenges and Opportunities for Accounting and Financial Markets Research

Leuz

2018

SSRN Journal

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The use of evidence and economic analysis in policymaking is on the rise, and accounting standard setting and financial regulation are no exception. This article discusses the promise of evidence-based policymaking in accounting and financial markets as well as the challenges and opportunities for research supporting this endeavor. In principle, using sound theory and robust empirical evidence should lead to better policies and regulations. But despite its obvious appeal and substantial promise, evidence-based policymaking is easier demanded than done. It faces many challenges related to the difficulty of providing relevant causal evidence, lack of data, the reliability of published research, and the transmission of research findings. Overcoming these challenges requires substantial infrastructure investments for generating and disseminating relevant research. To illustrate this point, I draw parallels to the rise of evidence-based medicine. The article provides several concrete suggestions for the research process and the aggregation of research findings if scientific evidence is to inform policymaking. I discuss how policymakers can foster and support policy-relevant research, chiefly by providing and generating data. The article also points to potential pitfalls when research becomes increasingly policy-oriented.JEL classification: A11, D61, D72, G18, G38, K22, L51, M48 * This paper is based on my 2017 PD Leake Lecture at the ICAEW. I acknowledge helpful comments from the editors, Luzi Hail, Christian Laux and, especially, Maximilian Muhn. I also thank Maximilian Muhn for his excellent research assistance. I have worked as an economic advisor to the PCAOB and still serve as a consultant from time to time. I have also co-written independent research reports on policy questions for the FASB and the SASB. The views expressed in this paper are my own.

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Disclosure Regulation in the Commercial Banking Industry: Lessons from the National Banking Era

Cited by 95 publications

References 80 publications

Banks’ Financial Reporting and Financial System Stability

Banks’ Financial Reporting and Financial System Stability

Why regulate private firm disclosure and auditing?

Evidence-Based Policymaking: Promise, Challenges and Opportunities for Accounting and Financial Markets Research

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