Manager Characteristics and the Informativeness of Banks‘ Loan Loss Provisioning

Jahr: 2025
Typ: Journal Publication
Fachzeitschrift: Review of Accounting Studies

Abstract

This study investigates the role of individual managers in banks‘ financial reporting. We exploit the connectedness between different managers and find that individual bank managers explain approximately 19 percent of banks‘ loan loss provisions. This observation is consistent with the substantial reporting discretion that individual bank managers use in the estimation of loan loss provisions, and that is increasingly subject to financial stability concerns by prudential supervisors. Our results suggest that these concerns are valid as individual management discretion is associated with a higher level of discretionary loan loss provisions and proxies for opportunistic accounting behavior, especially the reduction in the timeliness of these provisions and the lesser degree to which the allowance for credit losses maps into future charge-offs. These findings are relevant for the design of regulatory measures aimed at limiting the managerial influence on accounting choices in the banking industry and can inform debates on the desirability of discretion within the reporting process of banks.

Beteiligte Institutionen

Die Hauptstandorte vom TRR 266 sind die Universität Paderborn (Sprecherhochschule), die HU Berlin und die Universität Mannheim. Alle drei Standorte sind seit vielen Jahren Zentren für Rechnungswesen- und Steuerforschung. Hinzu kommen Wissenschaftler der LMU München, der Frankfurt School of Finance and Management, der Goethe-Universität Frankfurt, der Universität zu Köln und der Leibniz Universität Hannover, die die gleiche Forschungsagenda verfolgen.

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