Equity Incentives and Earnings Management: Evidence from the Banking Industry

Cheng, Qiang; Warfield, Terry D.; Ye, Minlei

doi:10.2139/ssrn.1326558

Cited by 30 publications

(39 citation statements)

References 36 publications

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“…For recent studies on managerial incentives that give rise to earnings smoothing for financial industries, see Cheng et al . () and Eckles et al . (), and for discussions on how regulations could change earnings smoothing incentives for bank managers, see Kilic et al .…”

mentioning

confidence: 86%

How Accurately Can Z‐score Predict Bank Failure?

et al. 2016

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Bank risk is not directly observable, so empirical research relies on indirect measures. We evaluate how well Z‐score, the widely used accounting‐based measure of bank distance to default, can predict bank failure. Using the U.S. commercial banks’ data from 2004 to 2012, we find that on average, Z‐score can predict 76% of bank failure, and additional set of other bank‐ and macro‐level variables do not increase this predictability level. We also find that the prediction power of Z‐score to predict bank default remains stable within the three‐year forward window.

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confidence: 86%

How Accurately Can Z‐score Predict Bank Failure?

et al. 2016

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“…The PSB have a disproportionately larger share of NPL and related charge‐offs as compared with private banks. Recent studies have focused on the role of managerial compensation in affecting earnings management behaviour and found linkages between the two (Bergstresser & Philippon, ; Cheng, Warfield, & Ye, ). The compensation practices of PSB are significantly different from the private banks.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Nonperforming loan auction: Prudent policy response or earnings management?

Pandey

Guhathakurta

2019

Journal of Public Affairs

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The use of asset management companies is one of the standard policy prescriptions for the resolution of the banking crisis. In this paper, we investigate whether banks use the sale of nonperforming loans to asset management companies to exploit the accounting guidelines and manage their reported earnings. Using nonperforming loans sale data of Indian banks, we examine the role of income smoothing, regulatory capital compliance, and ownership concentration in cherry‐picking nonperforming loans offered for sale. We report evidence that the above considerations dissimilarly affect selective identification of nonperforming loans. Our results show that banks with below average return on assets, banks with below average capital ratio, and banks with a significant government ownership engage in selective identification of nonperforming loans offered for sale.

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“…Fenomena manajemen laba di bank timbul karena adanya batasan regulator yang berkaitan dengan rasio kecukupan modal atau CAR (capital adequacy ratio) dan adanya insentif yang tinggi atas posisi ekuitas untuk memaksimalkan bonus (Bertrand 2000;Healy dan Whalen 1999;Cheng et al 2008). Cheng et al (2008) menjelaskan bahwa ada beberapa bank yang memilki insentif untuk mengurangi volatilitas laba dengan cara menurunkan laba pada tahun fiskal yang menghasilkan kinerja yang baik atau meningkatkan laba pada tahun 1 Peraturan Bank Indonesia Nomor 14/14/PBI/2012 tentang Transparansi dan Publikasi Laporan Bank fiskal yang menghasilkan kinerja yang kurang baik.…”

Section: Pendahuluanunclassified

“…Cheng et al (2008) menjelaskan bahwa ada beberapa bank yang memilki insentif untuk mengurangi volatilitas laba dengan cara menurunkan laba pada tahun fiskal yang menghasilkan kinerja yang baik atau meningkatkan laba pada tahun 1 Peraturan Bank Indonesia Nomor 14/14/PBI/2012 tentang Transparansi dan Publikasi Laporan Bank fiskal yang menghasilkan kinerja yang kurang baik.…”

Section: Pendahuluanunclassified

Trade-Off Antara Manajemen Laba Akrual Dan Riil Pada Bank Konvensional Publik Di Indonesia

Ontorael¹,

Geraldina²

2017

JAKI

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Earnings management arises from a conflicting goal between agents and principals which basically means as managers' intentions to manipulate accounting figures in the financial Keywords: earnings management costs, accrual earnings management, real earnings management AbstrakManajemen laba timbul akibat konflik kepentingan antara agen dan prinsipal yang sering diartikan dengan intensi manajemen untuk melakukan manipulasi angka akuntansi dalam laporan keuangan agar sesuai dengan kepentingan manajemen. Terdapat dua teknik manajemen laba yang umumnya dilakukan oleh manajemen, yaitu manajemen laba akrual dan manajemen laba riil. Penelitian ini bertujuan untuk menguji pengaruh biaya manajemen laba terhadap keputusan manajemen laba. Dengan menggunakan 14 bank yang berturut-turut terdaftar di Bursa Efek Indonesia selama periode 2009-2013, hasil penelitian menunjukkan bahwa biaya manajemen laba berpengaruh terhadap keputusan manajemen laba. Akan tetapi, penelitian ini tidak menemukan bukti bahwa terdapat tradeoff antara pengambilan keputusan manajemen laba akrual dan manajemen laba riil. Temuan ini memiliki implikasi terkait penggunaan biaya manajemen laba pada bank publik di Indonesia dalam mempertimbangkan keputusan manajemen laba.Kata kunci: biaya manajemen laba, manajemen laba akrual, manajemen laba riil

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Equity Incentives and Earnings Management: Evidence from the Banking Industry

Cited by 30 publications

References 36 publications

How Accurately Can Z‐score Predict Bank Failure?

How Accurately Can Z‐score Predict Bank Failure?

Nonperforming loan auction: Prudent policy response or earnings management?

Trade-Off Antara Manajemen Laba Akrual Dan Riil Pada Bank Konvensional Publik Di Indonesia

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