An Empirical Study on Facotrs Influencing The Recognition of Loan Impairment by U.S. Commercial Banks

• Main Authors: Chang,Chih-Kai, 張智凱
• Other Authors: Liu,Shuen-Zen
• Format: Others
• Language: zh-TW
• Published: 1996
• Online Access: http://ndltd.ncl.edu.tw/handle/93864068828197233213

碩士 === 國立臺灣大學 === 會計學研究所 === 84 === This study investigates how managerial incentives can affect financial report recognition of loan impairments in the banking industry. This paper first examines the effects of signaling incentive. Primary capital adequacy ratio regulation, incoming-smoothing, and big-bath incentives are also examined concerning the discretionary loan loss provision. In addition, the discretionary loan loss charge-off decisions are hypothesized to be affected by the primary capital adequacy ratio regulation and tax-saving incentives. Exogenous variables that may affect the loan loss provision and charge-off decisions are controlled by also including them in the models. Finally, the loan loss reserve decision is examined through the loan loss provision and loan loss charge-off decisions via the accounting identity prescribed by accounting guides. This thesis is empirically tested using the Seemingly Unrelated Regression analysis for the 400 U.S. unit banks in 1987-1990. The main empirical results are summarized as follows. 1.The signaling, the primary capital adequacy ratio regulation and big bath htpothesis are supported regarding the loan loss provision decision. 2.The results of unit banks and bank holding companies are fairly consistent according to the study. 3.The results of pooling and year-by-year are not consistent. Particularly, the results of managerial incentive variables are not robust across different periods. By contrast, the results of most of the control variables are quite stable.