This study examines the private debt contracting relation between performance covenants and conservative accounting under asymmetric information. Asymmetric information is characterized by borrowers' proclivity to appropriate wealth from lenders to themselves. We find that accounting...

Building on the recent literature on corruption in bank lending, we examine the effect of country-level timely loan loss recognition by banks on lending corruption using a unique World Bank dataset that covers more than 3,600 firms across 44 countries. We find evidence consistent with timely...

We examine the real effects of FAS 166 and FAS 167 on banks' loan-level mortgage approval and sale decisions. Effective in 2010, these standards tightened the accounting for securitizations and consolidation of securitization entities, respectively, causing banks to recognize an estimated $811...

This study examines the relation between performance covenants in private debt contracting and conservative accounting under adverse selection. We find that under severe adverse selection (i.e., high information asymmetry), accounting conservatism and performance covenants act as complements to...

Exploiting differential interstate branching deregulation across contiguous counties of adjacent states, we investigate the effect of entry threat on incumbent banks' loan loss provisions. Incumbents exposed to entry threat have offsetting incentives; lower provisions make their loan...