ABSTRACT Using an international sample of banks and country-level indices for individualism uncertainty avoidance as proxies national culture, we study how differences in culture across countries affect accounting conservatism bank risk-taking. Consistent with expectations, our cross-country analysis indicates that is negatively (positively) related to (risk-taking) positively (negatively) (risk-taking). We also find cultures encourage higher risk-taking experienced more failures troubles...

ABSTRACT: We examine auditor independence in the banking industry by analyzing relation between fees paid to auditors and extent of earnings management through loan loss provisions (LLP). also whether this differs across large banks whose managements are required under Federal Deposit Insurance Corporation Improvement Act evaluate internal control over financial reporting must attest effectiveness such controls, small that not subject those requirements. find unexpected unrelated for banks....

Abstract We examine whether and how managers use loan loss provisions to smooth income signal their private information about banks' future prospects. Our paper highlights that the of provision accomplish more than one objective gives rise situation‐specific costs benefits manipulating up or down. hypothesize relatively undervalued banks have greater incentives prospects fairly valued intensify as premanaged earnings deviate from norms. On basis these conjectures, we categorize sample into...

SUMMARY Using an international sample of firms from 31 countries, we study the relation between auditor quality and corporate tax aggressiveness. Employing indicator variable for aggressiveness when firm's avoidance measure is within top quintile each country-industry combination, find strong evidence that negatively associated with likelihood aggressiveness, even after controlling other institutional determinants such as home-country system characteristics. We also negative more pronounced...

We study the relationship between societal trust and risk-taking in banking industry. Prior literature has found that is positively related to both financial reporting conservatism transparency, which reduce bank managers’ ability take excessive risk. Additionally, managers high-trust countries are more likely exhibit higher pro-social behavior and, therefore, less risk for personal benefit. Consistent with these arguments, we document banks lower also experienced trouble fewer failures...

Purpose This study aims to examine declines in audit quality after the COVID-19 travel restrictions/stay-at-home orders were issued USA early 2020. Design/methodology/approach Taking advantage of variation dates stay-at-home by different US states, this identifies engagements that significantly affected lock down orders. Findings The results suggest restrictions produced lower quality, as measured through restatements and discretionary accruals, relative those completed before Further...

We examine the relation between disaster risk and banks' loan loss provisions (LLP). propose a measure based on natural disasters declared as major by Federal Emergency Management Agency over 15-year span. theoretically support empirically validate our using three different approaches, including UN Sendai Framework for reduction, which relates to hazard exposure, vulnerability capacity, characteristics. Using more than 445,000 bank-quarter observations, we document that banks located in U.S....

Prior research demonstrates that share prices reflect a risk premium is associated with earnings variability. This suggests managers can reduce the cost of capital and increase by reducing In this study, we investigate bank managers' use discretion in estimating loan loss provisions (LLP) to We find banks relatively high pre‐managed have positive discretionary LLP low negative LLP, results are consistent hypothesis management addition, decisions variability related need for external...