Balancing acts: bank market deregulation and the dynamics of earnings management
Mi, B.
It is advisable to refer to the publisher's version if you intend to cite from this work. See Guidance on citing. To link to this item DOI: 10.1016/j.irfa.2025.104040 Abstract/SummaryThis study examines the impact of bank market deregulation in U.S. since 1994 on corporate earnings management decision makings. We show that bank market deregulation has led to a trade off between accrual based earnings management and real earnings management. The trade off is driven by the improved monitoring of banks since deregulation where banks pay more diligence to monitor accruals which are reverse in a short term and more relevant to the default risk banks expose to. To respond, firms engage in more real earnings management which has a long term impact on corporate performance but is less relevant to current default risk.
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