Publication Type
Journal Article
Version
acceptedVersion
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
Citation
LIM, Chu Yeong; LEE, Edward; KAUSAR, Asad; and WALKER, Martin.
Bank Accounting Conservatism and Bank Loan Pricing. (2014). Journal of Accounting and Public Policy. 33, (3), 260-278.
Available at: https://ink.library.smu.edu.sg/soa_research/1195
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jaccpubpol.2014.02.005