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Full-Text Articles in Business

The Use Of Loan Loss Provisions For Earnings, Capital Management And Signalling By Australian Banks, Asokan Anandarajan, Iftekhar Hasan, Cornelia Mccarthy Aug 2005

The Use Of Loan Loss Provisions For Earnings, Capital Management And Signalling By Australian Banks, Asokan Anandarajan, Iftekhar Hasan, Cornelia Mccarthy

CRIF Working Paper series

This research is motivated by the fact that there is a paucity of research on the earnings management practices of banks in Australia. Research on the practices of North American, European and Asian banks provided conflicting evidence. In this study, we examine whether Australian banks engage in earnings, capital management and signalling, and, if so, the extent to which loan loss provisions (LLPs) are used for this purpose. Our results indicate that banks in Australia use loan loss provisions to manage earnings. Further, listed commercial banks engage more aggressively in earnings management using LLPs than other banks. We also find …


Pricing Of Seasoned Equity Offers And Earnings Management, Yongtae Kim, Myung Seok Park Jun 2005

Pricing Of Seasoned Equity Offers And Earnings Management, Yongtae Kim, Myung Seok Park

Accounting

This study examines the relationship between earnings management by firms offering seasoned equity issues and the pricing of their offers. We hypothesize that seasoned equity offering (SEO) firms employing aggressive accounting decisions also more aggressively push up their offer prices, thereby leading to a decrease in the degree of underpricing. Consistent with our prediction (the issuer's greed hypothesis), evidence indicates that SEO firms making opportunistic accounting decisions issue new shares at inflated prices. Our findings remain robust after controlling for other determinants of SEO underpricing and the possible endogeneity of pricing and earnings management.