Using a data set that records banks' ongoing requests of information from small commercial borrowers, we examine when banks use financial statements to monitor borrowers after loan origination. We find that banks request financial statements for half the loans and this variation is related to...

We examine how the corporate tax system, through its treatment of loan losses, affects bank financial reporting choices. Our identification strategy exploits cross-country and intertemporal variation in corporate tax rates and the tax deductibility of loan loss provisions. Using an international...

Using a dataset which records banks' ongoing requests of information from small commercial borrowers, we examine when banks use financial statements to monitor borrowers after loan origination. We find banks request financial statements for half the loans and this variation is related to...

The recent switch from the incurred credit loss model to the expected credit loss model is an important change to bank financial reporting systems around the world. The expected credit loss model requires banks to monitor their borrowers closely for more timely recognition of loan losses. We...

During the late 1990's, the SEC alleged that banks were overstating their loan loss allowances to establish cookie jar reserves and issued new guidance on allowance estimation designed to improve financial reporting quality. We show that banks' estimation methods changed in response to the...

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 mandatory recognition of hedge ineffectiveness under SFAS 133 reduced...

Recent evidence suggests that investors struggle to process complex financial disclosures. Relative to equity and public debt investors, banks have unique advantages in acquiring information and can impose contractual terms to mitigate information frictions. We investigate whether financial...

We find that bond issuers receive bank loans with 11% fewer covenants when the secondary corporate bond market becomes more transparent. The treatment effect is more pronounced when the stock prices are less informative and when the debt-equity agency conflicts are more severe. The evidence...

This study develops a timely and unbiased measure of expected credit losses. The expected rate of credit losses (ExpectedRCL) is a linear combination of various non-discretionary credit risk-related measures disclosed by banks. ExpectedRCL performs substantially better than net charge-offs,...

We study whether bank managers' use their discretion in estimating the allowance for loan losses (ALL) for efficiency or for opportunistic reasons. We do so by examining whether the use of this discretion relates to bank stability and bank risk taking, or whether it relates to earnings...