Discussion on Quality of Bank Credit Decisions and Earnings Management of SMEs-Northern Taiwan SMEs Case

• Main Authors: Jhong, Meng-Teng, 鍾孟騰
• Other Authors: Chen, Yen-pao
• Format: Others
• Language: zh-TW
• Published: 2015
• Online Access: http://ndltd.ncl.edu.tw/handle/thwbby

碩士 === 東吳大學 === 會計學系 === 103 === Domestic bank loans to SMEs accounted for more than half of the total loan number of all enterprises in Taiwan. Obviously, SMEs financing is actually one of the key business of domestic banks. However, Is it truly reflect the actual operating conditions that SMEs provided to the banks? Is the bank internal credit rating made by the financial statements able to fully reflect the business performance of SMEs? In distortion internal credit rating as the basis, will it result in false bank loan decisions? In this study, 85 SMEs in Northern Taiwan were analyzed. In addition to applying the modified Jones model to examine the relationship between discretionary accruals and the bank credit rating, we also investigate whether the discretionary accruals will affect the bank loan decision through SMEs obtaining loans or not. We find that earnings management will indeed affect the bank credit rating of SMEs, but it has no obvious effect on bank loan decisions. This conclusion does not differ whether the SME is manufacturing or not. According to this conclusion, when SMEs want to successfully Obtain bank loans, do not focus only on the financial statements of landscaping. Besides enhancing the payment evaluation by earnings management, we can also start from the remaining credit 4P criteria. Earnings management of SME does not affect the bank loan decision, however, credit rating distortion may still affect the setting of credit conditions. It recommends that banks could collect SMEs financial information to establish a database in order to understand the industry earnings management situation, and as a reference when the bank staff handle SMEs financing case.