I investigate the demand for and benefits of private company audits. Agency theory predicts audits are demanded as a monitoring mechanism. I consider two sources of this demand - external stakeholders and management - and related benefits. First, audits may be used to reduce agency costs...

The simultaneous unwinding of leveraged positions can trigger financial market turbulence. Although balance-sheet measures of leverage are available, it is useful to construct a measure of leverage that incorporates both on- and off-balance-sheet activities. This paper provides measures of...

The purpose of the Allowance for Loan Losses (Allowance) is to adjust gross loans for credit quality. Prior research has given conflicting evidence on whether Bank Holding Companies (BHCs) manage earnings through the Allowance. This paper reveals findings from a two stage regression for all BHCs...

Performance pricing links the interest rate spread on bank debt to a borrower's performance via two options. It gives borrowers an option to reduce interest rates if credit quality improves, and it gives lenders an option to receive higher interest rates if credit quality deteriorates. Contracts...

A fair level of provisions on bad and doubtful loans is an essential input in mark-to-market accounting, and in the calculation of bank capital and solvency. Few academic studies have analyzed the adequacy of loan-loss provisioning because, due to the private nature of bank loan transactions,...

Banks worldwide are subject to increasing regulation and, simultaneously, find themselves under the close scrutiny of market analysts and screening of large institutional investors. Banks are required to maintain minimal equity relative to both total and risky assets, market analysts expect...

The paper analyses the effects of three sets of accounting rules for financial instruments - Old IAS before IAS 39 became effective, Current IAS or US GAAP, and the Full Fair Value (FFV) model proposed by the Joint Working Group (JWG) - on the financial statements of banks. We develop a...

Accounting scholars and policy makers have expressed concern about the quality of accounting data. Because earnings and capital management practices alter the information content of accounting statements, we ask whether a transparent smoothing device such as the statistical provision - a...

Prior studies on the determinants of audit reports focus on non-financial sectors. In contrast, the present study examines the determinants of auditors' opinion in the banking industry, using a sample of banks drawn from 9 Asian countries over the period 1995-2004. We use logistic regression and...

I explore which firm and loan characteristics decrease or exacerbate information asymmetry in the trading of private debt. I find that loans of public firms, loans with an available credit rating, loans of profit firms and loans syndicated by more reputable arrangers are traded at lower bid-ask...