دانلود رایگان مقاله انگلیسی تأثیر رگولاتورهای بانک و حسابرسان خارجی بر میزان ذخایر زیان وام - الزویر 2017

Abstract

I examine whether bank regulators and external auditors have conflicting effects on loan loss provision timeliness, an accounting choice associated with important economic consequences and a potential conflict between regulators and auditors. In the absence of the other group, auditors and strict regulators are each positively associated with timeliness. However, audits are negatively associated with timeliness when strict regulators are present, consistent with a conflict for which auditors are the dominating group as audited banks attain a similar level of timeliness regardless of the extent of regulatory scrutiny. Collectively, this suggests that regulators and auditors differentially influence loan loss provisions.

7. Conclusion

This paper examines how the objectives and incentives of bank regulators and external auditors affect loan loss provisions. The results indicate that greater regulatory scrutiny and external audits are each positively associated with loan loss provision timeliness, relative to the group of unaudited banks subject to lower regulatory scrutiny. I next document that at banks subject to greater regulatory scrutiny, audited banks are less timely relative to unaudited banks, which is consistent with a conflict between regulators and auditors and with auditors serving as the dominating influence. I corroborate the interpretation by showing that the conflict results are strongest when banks are loosening their credit standards and that the results generally hold using a within state bank design. Although I am unable to draw inferences regarding the optimality of this conflict or the implications for the banking system, my findings suggest that the different parties involved in bank monitoring influence how accounting guidance is applied, which should be of interest to bank managers, regulators, auditors, and those involved in audit oversight.

This paper contributes to our understanding of the role of regulators and auditors in the bank financial reporting process and how their different objectives and incentives affect accounting choices. Despite a large literature on loan loss provision discretion, relatively little is known about the influence of the supervision and auditing functions or the factors that drive loan loss provision timeliness (Beatty and Liao, 2014; Bushman, 2014). My focus on loan loss provision timeliness provides insight into the debate following the financial crisis regarding differences in implementation of the incurred loss model. Specifically, my documentation of differences in loan loss provision timeliness based on regulator and auditor variation has implications for the upcoming Current Expected Credit Loss (CECL) model and suggests that differences in regulator and auditor objectives and incentives may influence the application of the new standard.