Publication Type

Journal Article

Version

Preprint

Publication Date

1-2013

Abstract

We examine the impact of SFAS 133, Accounting for Derivative Instruments and Hedging Activities, on the reporting behavior of commercial banks and the informativeness of their financial statements. We argue that because the stricter recognition and classification requirements of SFAS 133 reduced banks' ability to smooth income through derivatives, banks more affected by SFAS 133 will rely more on loan loss provisions to smooth income. We find evidence consistent with this argument. We also find that the increased reliance on loan loss provisions for smoothing income has impaired the informativeness of loan loss provisions.

Keywords

SFAS 133, Income Smoothing, Hedging, Derivatives, Loan Loss Provisions

Discipline

Accounting | Corporate Finance

Research Areas

Financial Performance Analysis

Publication

Accounting Review

Volume

88

Issue

1

First Page

233

Last Page

260

ISSN

0001-4826

Identifier

10.2308/accr-50264

Publisher

American Accounting Association

City or Country

USA

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/10.2308/accr-50264

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