Kanagaretnam, Kiridaran; Lobo, Gerald J; Mathieu, Robert - In: Review of Quantitative Finance and Accounting 20 (2003) 1, pp. 63-80
We examine alternative underlying motives of bank managers in using loan loss provisions (LLP) to smooth reported income. Based on the analytical results of Fudenberg and Tirole (1995), we predict that for banks with good (poor) current performance and expected poor (good) future performance,...