Journal
JOURNAL OF ACCOUNTING & ECONOMICS
Volume 66, Issue 1, Pages 244-265Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.jacceco.2018.05.003
Keywords
Banks; Loan loss provisions; Bank supervision; Auditors
Categories
Funding
- Wharton School
- Fisher College of Business
- Deloitte Foundation Doctoral Fellowship
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I examine whether bank regulators and external auditors have conflicting effects on loan loss provision timeliness, an accounting choice associated with important economic consequences and a potential conflict between regulators and auditors. In the absence of the other group, auditors and strict regulators are each positively associated with timeliness. However, audits are negatively associated with timeliness when strict regulators are present, consistent with a conflict for which auditors are the dominating group as audited banks attain a similar level of timeliness regardless of the extent of regulatory scrutiny. Collectively, this suggests that regulators and auditors differentially influence loan loss provisions.
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