The role of bank monitoring in corporate governance: Evidence from borrowers’ earnings management behavior

Ahn, Sungyoon; Choi, Wonsuk

doi:10.1016/j.jbankfin.2008.08.013

Cited by 167 publications

(158 citation statements)

References 44 publications

(51 reference statements)

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“…This result supports the previous finding 11 that bank monitoring is negatively associated with earnings management behavior. A bank with less monitoring over borrowers may give rise to undetected earnings management behavior.…”

Section: Earnings Management Practice and Corporate Borrowing Capacitysupporting

confidence: 92%

“…A previous study 11 investigated how bank monitoring of borrowers' earnings management behavior found that collateral and loan types are significantly associated with borrowers' earnings management behavior. Based on this, earnings management practice will also directly and negatively affect borrowing capacity.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

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The Effect of Earnings Management Practice on Corporate Borrowing Capacity through Corporate Reputation

Setiawan¹,

Hermawan²

2018

Proceedings of the 6th International Accounting Conference (IAC 2017)

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This research is conducted to determine the association between earnings management practice and corporate borrowing capacity through corporate reputation. Earnings management practice is measured by discretionary accruals based on the Modified Jones Model. Hypotheses are tested using multiple regression analysis and two-stage ordinary least squares for 65 companies listed on the Indonesia Stock Exchange in the period 2012-2013. The results of the research provide empirical evidence that earnings management practice has a significant negative association with corporate reputation, while corporate reputation has a significant positive association with corporate borrowing capacity. The results of this research also show that there is a significant positive association between corporate reputation estimated by earnings management practice and borrowing capacity.

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Section: Earnings Management Practice and Corporate Borrowing Capacitysupporting

confidence: 92%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

The Effect of Earnings Management Practice on Corporate Borrowing Capacity through Corporate Reputation

Setiawan¹,

Hermawan²

2018

Proceedings of the 6th International Accounting Conference (IAC 2017)

View full text Add to dashboard Cite

show abstract

“…On the other hand, the firms remain busy in maintaining proper corporate governance which can relax the bank of being default (Buysse & Verbeke, 2003;Shleifer & Vishny, 1997) and consequently firms can expand their business by getting a proper financial contract (Esty & Megginson, 2003;Qian & Strahan, 2007) because of their reputation gained by adhering to the entire governance norm. This, in turn, helps the bank to retain their reputation in the society (Thompson & Cowton, 2004) and also to reduce the credit default risk (Ahn & Choi, 2009). …”

Section: According To the Comprehensive Environmental Response Compementioning

confidence: 99%

“…This develops a positive impact on the future cash flow that reduces the probability of credit default. High firms' revenue helps the bank to manage their reputation risk (Ahn & Choi, 2009) which is one of the most important elements in the banks' risk management process (Fraser, Gup & Kolari 2001).…”

Section: Effect On Revenuementioning

confidence: 99%

“…Having access to proprietary information, banks always try to become an effective monitor (Diamond, 1984;Fama, 1985). They reduce the informational asymmetry problem by taking care of adverse selection and moral hazard problem (Ahn & Choi, 2009). Environment consciousness of the firms plays a vital role in handling the above said problems.…”

Section: Effect On Information Asymmetrymentioning

confidence: 99%

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Do banks value the eco-friendliness of firms in their corporate lending decision? Some empirical evidence

Nandy

Lodh

2012

International Review of Financial Analysis

179

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How Would the Stock Exchange Monitoring Role Affect the Performance of U.S. Firms: Evidence From Cross‐Listed Firms in the United States

Hassan¹

2017

J Corp Accounting Finance

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Stock exchanges perform governance activities, among these activities, monitoring is considered as one of the stock exchanges most distinctive and important activities, since it increases shareholders' ability to evaluate managerial performance, and put in place effective managerial incentive schemes; yet little research attention has focused on the effects of stock exchanges as an external mechanism on firm performance. This article provides empirical evidence on whether stock exchange monitoring is successful. Using a comprehensive measure comprising a range of stock exchange monitoring factors suggested by prior literature as important determinants of stock exchange monitoring role, the results indicate that the strength of stock exchange monitoring is positively associated with firm performance as measured by return on assets, return on equity and Tobin's Q. A more comprehensive analysis provides additional evidence suggests that U.S. firms are more likely to be influenced by U.S. stock exchanges monitoring than their non‐U.S. counterparts and the incremental legal bonding benefit provided by the Sarbanes‐Oxley Act (SOX) for U.S. firms was exceeded by SOX's incremental costs. Finally, the findings of this study highlight a number of implications for academics, the SEC and other international standard setters, securities regulators, and stock exchange operators. © 2017 Wiley Periodicals, Inc.

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The role of bank monitoring in corporate governance: Evidence from borrowers’ earnings management behavior

Cited by 167 publications

References 44 publications

The Effect of Earnings Management Practice on Corporate Borrowing Capacity through Corporate Reputation

The Effect of Earnings Management Practice on Corporate Borrowing Capacity through Corporate Reputation

Do banks value the eco-friendliness of firms in their corporate lending decision? Some empirical evidence

How Would the Stock Exchange Monitoring Role Affect the Performance of U.S. Firms: Evidence From Cross‐Listed Firms in the United States

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