The adoption of SAB 101, a regulation affecting revenue recognition, was controversial. The SEC argued that firms were using their revenue recognition practices to manage earnings, while opponents asserted that eliminating accepted revenue recognition practices would decrease the quality of...

Performance pricing is a recent contractual innovation, which ties interest rates to a pre-specified grid of some measure of credit risk. We investigate performance pricing because it is becoming a common feature in bank debt, and essentially represents a rare example of market pricing directly...

Banks with low regulatory capital facing external-financing frictions may reduce lending to avoid a capital shortage. The capital crunch theory predicts that banks' lending is particularly sensitive to their capital ratios during recessions. Procyclicality in bank lending may be magnified when...

This paper investigates the extent to which banks alter the timing and magnitude of transactions such as asset sales, loan loss accruals, pension settlements and securities issues in response to primary capital, tax, and earnings goals. The authors hypothesize that each year bank managers face a...

This study examines whether accounting changes result in changes in the economic behaviour of financial institutions. The results of several papers examining how banks respond to accounting changes that affect their regulatory capital ratios are consistent with Furfine's (2000) summary that...