The Dark Side of Bank CEO Risk-taking Incentives: Evidence from Bank Lending Decisions

Ho, Po-Hsin; Lin, Chih‐Yung; Linh, Tran Thi Thuy

doi:10.2139/ssrn.3416023

Cited by 4 publications

(4 citation statements)

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“…In particular, the partisan (6) (lnEPU) t = c + a 1 (lnEPUCAN) t + a 2 (VIX) t + a 3 (GDPgr) t + a 4 (GDPgap) t + u t 8 In the change regression (model 3 of Panel A in Table 6) we do not include firm fixed effects as these are wiped out by construction in such a regression. Ho et al (2018) posit that the change regression is also a good robustness test for the firm fixed effects regression because the former is free from bias stemming from firm-level omitted variables that are constant over time. In the other specifications of Panel A in Table 6 (models 1 and 2) we include firm fixed effects.…”

Section: Two-stage Least Squares Instrumental Variable (2sl-iv) Estimationsmentioning

confidence: 99%

Does economic policy uncertainty matter for financial reporting quality? Evidence from the United States

Bermpei

Kalyvas

Neri

et al. 2021

Rev Quant Finan Acc

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We examine the effect of economic policy uncertainty (EPU) on the financial reporting quality of US firms over 1999-2015. We use accruals-based earnings management as a proxy for financial reporting quality and the index of Baker et al. (Quart J Econ 131:1539-1636, 2016 as an EPU measure to show that they exhibit a positive and significant association. We also find a causal effect by employing three political polarization instruments for EPU. In a cross-sectional analysis, we further show that the positive relationship between EPU and earnings management strengthens for firms operating in politically sensitive industries, for firms in more financial distress, and during recessionary periods. We also provide evidence that increased financial constraints facilitate the positive relationship between EPU and earnings management. These findings are robust to the use of alternative measures of economic policy uncertainty and when we employ real earnings management as a dependent variable. These results indicate that managers aim to provide outsiders with an improved financial position of the company when EPU is high. Our findings suggest that investors, analysts, creditors, and regulators should be wary of firms' financial reporting quality in periods of high economic policy uncertainty.

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Section: Two-stage Least Squares Instrumental Variable (2sl-iv) Estimationsmentioning

confidence: 99%

Does economic policy uncertainty matter for financial reporting quality? Evidence from the United States

Bermpei

Kalyvas

Neri

et al. 2021

Rev Quant Finan Acc

View full text Add to dashboard Cite

show abstract

“…In the change regression (model 3 of Panel A in Table6) we do not include firm fixed effects as these are wiped out by construction in such a regression Ho et al (2018). posit that the change regression is also a good robustness test for the firm fixed effects regression because the former is free from bias stemming from firm-level omitted variables that are constant over time.…”

mentioning

confidence: 99%

Does Economic Policy Uncertainty Matter for Financial Reporting Quality? Evidence from the United States

et al. 2019

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“…Rajan and Winston (1995) indicate that lenders use loan covenants to enhance the ex-post monitoring of changes in loan quality. Also, recent debt covenant literature has suggested that banks with more market risk are likely to use fewer/looser covenants in their loan contracts (e.g., Berger et al, 2017;Ho et al, 2019;Nguyen et al, 2019). Therefore, we investigate whether banks decrease their risk-taking by using more debt covenants to monitor borrowing firms following the enactment of UD laws.…”

Section: Syndicate Loansmentioning

confidence: 99%

Shareholder litigation and bank risk

Degl’Innocenti

Fiordelisi

Song

et al. 2023

Journal of Banking & Finance

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The Dark Side of Bank CEO Risk-taking Incentives: Evidence from Bank Lending Decisions

Cited by 4 publications

References 0 publications

Does economic policy uncertainty matter for financial reporting quality? Evidence from the United States

Does economic policy uncertainty matter for financial reporting quality? Evidence from the United States

Does Economic Policy Uncertainty Matter for Financial Reporting Quality? Evidence from the United States

Shareholder litigation and bank risk

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