Publication Type

Journal Article

Publication Date

5-2014

Abstract

This paper studies the effects of bank accounting conservatism on the pricing of syndicated bank loans. We provide evidence that banks timelier in loss recognition charge higher spreads. We go onto consider what happens to the relationship between spreads and timeliness in loss recognition during the financial crisis. During the crisis, banks timelier in loss recognition increase their spreads to a lesser extent than banks less timely in loss recognition. These findings are broadly consistent with the argument that conditional accounting conservatism serves a governance role. The policy implication is that banks timelier in loss recognition exhibit more prudent and less pro-cyclical loan pricing behaviour.

Keywords

bank accounting, conservatism

Discipline

Accounting | Finance and Financial Management

Research Areas

Corporate Governance, Auditing and Risk Management

Publication

Journal of Accounting and Public Policy

Volume

33

Issue

3

First Page

260

Last Page

278

ISSN

0278-4254

Identifier

10.1016/j.jaccpubpol.2014.02.005

Publisher

Elsevier

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org/10.1016/j.jaccpubpol.2014.02.005

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