Abstract:
Using data of Chinese commercial banks from 2002 to 2014, this paper examines the impact of regional competition of banking industry on the earnings quality of banks in China. Our main analysis indicates that earnings quality of commercial banks in China is negatively associated with regional competition. In addition, we find that as regional competition becomes more intense, small banks and unlisted banks will be more inclined to conduct earnings management. However, the reinforcement of external audit will constrain this earnings management behavior. Our findings enrich the literature on the determinants of earnings quality of commercial banks and the economic consequences of bank competition. In practice, these results will be helpful for facilitating stakeholders’ understanding about the earnings quality of commercial banks in China. This paper may also provide guidance for the bank regulators in the process of marketization.
谢露, 王欣, 张敏. 区域竞争与商业银行的盈余质量——基于我国商业银行的经验证据[J]. 金融研究, 2016, 433(7): 134-149.
XIE Lu, WANG Xin, ZHANG Min. Regional Competition and Earnings Quality of Commercial Banks:Evidence from Chinese Commercial Banks. Journal of Financial Research, 2016, 433(7): 134-149.
Agarwal, Sumit, Souphala Chomsisengphet, Chunlin Liu, and S. Ghon Rhee. 2007. “Earnings Management Behaviors under Different Economic Environments: Evidence from Japanese Banks” International Review of Economics & Finance, 3:429~443.
[25]
Altamuro, Jennifer, and Anne Beatty. 2010. “How Does Internal Control Regulation Affect Financial Reporting?” Journal of Accounting and Economics, 49:58~74.
[26]
Beatty, Anne, Sandra L. Chamberlain, and Joseph Magliolo. 1995. “Managing Financial Reports of Commercial Banks: The Influence of Taxes, Regulatory Capital and Earnings” Journal of Accounting Research, 33(2):231~261.
[27]
Beatty, Anne L., Bin Ke, and Kathy R. Petroni. 2002. “Earnings Management to Avoid Earnings Declines across Publicly and Privately Held Banks” The Accounting Review, 77(3):547~570.
[28]
Burgstahler, David, and Ilia Dichev. 1997. “Earnings Management to Avoid Earnings Decreases and Losses” Journal of Accounting and Economics, 24:99~126.
[29]
Craswell, Allen T., Jere R. Francis, and Stephen L. Taylor. 1995. “Auditor Brand Name Reputations and Industry Specializations” Journal of Accounting and Economics, 20(3):297~322.
[30]
Degeorge, Francois, Jayendu Patel, and Richard Zeckhauser. 1999. “Earnings Management to Exceed Threshold” Journal of Business, 72:1~33.
[31]
Dechow, Patricia M., Richard G. Sloan, and Amy P. Sweeney. 1995. “Detecting Earnings Management” The Accounting Review, 70(2):193~225.
[32]
Fonseca, Ana Rosa, and Francisco González. 2008. “Cross-country Determinants of Bank Income Smoothing by Managing Loan-loss Provisions” Journal of Banking & Finance, 32(2):217~228.
[33]
Francis, Jere R., and Dechun Wang. 2008. “The Joint Effect of Investor Protection and Big 4 Audits on Earnings Quality around the World” Contemporary Accounting Research, 25(1):157~191.
[34]
Kanagaretnam, Kiridaran, Chee Yeow Lim, and Gerald J. Lobo. 2010. “Auditor Reputation and Earnings Management: International Evidence from the Banking Industry” Journal of Banking & Finance, 34(10):2318~2327.
[35]
Kanagaretnam, Kiridaran, Chee Yeow Lim, and Gerald J. Lobo. 2011. “Effects of National Culture on Earnings Quality of Banks” Journal of International Business Studies, 42(6):853~874.
[36]
Kanagaretnam, Kiridaran, Chee Yeow Lim, and Gerald J. Lobo. 2014. “Effects of International Institutional Factors on Earnings Quality of Banks” Journal of Banking & Finance, 39:87~106.
[37]
Liu, Chi-Chun, and Stephen G. Ryan. 1995. “The Effect of Bank Loan Portfolio Composition on the Market Reaction to and Anticipation of Loan Loss Provisions” Journal of Accounting Research, 33:77~94.
[38]
Lobo, Gerald J, and Dong-Hoon Yang. 2001. “Bank Managers’ Heterogeneous Decisions on Discretionary Loan Loss Provisions” Review of Quantitative Finance and Accounting, 16(3):223~250.
[39]
Moyer, Susan E. 1990. “Capital Adequacy Ratio Regulations and Accounting Choices in Commercial Banks” Journal of Accounting and Economics, 13(2):123~154.
[40]
Shen, Chung-Hua, and Hsiang-Lin Chih. 2005. “Investor Protection, Prospect Theory and Earnings Management: An International Comparison of the Banking Industry” Journal of Banking & Finance, 29:2675~2697.
[41]
Wu, Meng-Wen, Chung-Hua Shen, and Chin-Hwa Lu. 2015. “Do More Foreign Strategic Investors and More Directors Improve the Earnings Smoothing? The Case of China” International Review of Economics & Finance, 36:3~16.
