This paper investigates what we can learn from the financial crisis about the link between accounting and financial stability. The picture that emerges ten years after the crisis is substantially different from the picture that dominated the accounting debate during and shortly after the crisis....

Are “full audits” cost-effective in improving financial reporting quality compared to “reviews,” which are based primarily on analytical procedures and inquiries? The answer is important because independent verification cost-effectiveness is being challenged globally and recent advances...

Customer concentration increases supplier firms’ operational and financial risks. We posit that, for supplier firms sharing a common auditor with their major customer, creditors would perceive that the financial statements of the suppliers better reflect the inherent uncertainties and...

Using a dataset covering 3 million commercial borrower financial statements, we document a substantial, nearly monotonic decline in banks’ use of attested financial statements (AFS) in lending over the past two decades. Two market forces help explain this trend. First, technological advances...

I examine how changes to a bank's regulatory requirements affect liquidity creation. Using amendments in 2005 to the FDIC Improvement Act (FDICIA) and the Community Reinvestment Act (CRA), I document that treating each regulatory change as a separate event leads to confounding results. Ignoring...

Sustainable development has polarized the entire world, unveiling a new order of the global economy. In an economic vision, the new concept of human development implies the establishment of a suitable economic policy, monitoring it and encouraging investment and savings. The banking system has...

We examine how executive equity risk-taking incentives affect firms' choice of debt structure. Using a longitudinal sample of U.S. firms, we document that when executive compensation is more sensitive to stock volatility (i.e., has higher vega), firms reduce their reliance on bank debt...

We study the impact of internal governance mechanisms on the operational risk management provided with deposit banks of Turkey as a Basel compliant representative banking system. Drawing from internal audit, internal control, and risk management literature, we consider the impact of...

Lack of corporate governance was addressed as one of the reasons for financial scandals and crises experienced during the 2000s. Financial crises were followed by audit committee mechanism revision, and focus shifted onto how audit committees' governance quality could be improved. Using a unique...

This paper examines whether former auditors on the audit committee constrain earnings management in the banking industry. Given the complexity and the size of banking organizations, it can be argued that the audit committees of large banks should possess a higher level of financial expertise...