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Göteborgs universitets publikationer

The predictive ability of loan loss provisions in banks – Effects of accounting standards, enforcement and incentives

Författare och institution:
Jan Marton (Företagsekonomiska institutionen, Redovisning); Emmeli Runesson (Företagsekonomiska institutionen, Redovisning)
Publicerad i:
The British Accounting Review,
ISSN:
0890-8389
E-ISSN:
1095-8347
Publikationstyp:
Artikel, refereegranskad vetenskaplig
Publiceringsår:
2016
Språk:
engelska
Fulltextlänk:
Sammanfattning (abstract):
In this study we compare the predictive ability of loan loss provisions with respect to actual losses under IFRS and local GAAP. The 'incurred loss model' of IAS 39 is a model that requires a relatively low level of judgment by preparers compared to alternative models that exist under local GAAP. We find that loan loss provisions in IFRS bank years predict future credit losses to a lesser extent than in local GAAP bank years, consistent with the incurred loss model reducing the timeliness of provisions. We also examine the interaction of standards with enforcement of financial reporting and with preparer incentives. In testing the role of enforcement from, e.g., banking supervisory authorities, we find that the benefits of local GAAP are largely limited to high-enforcement settings. Local GAAP also performs relatively better than IFRS in large and in profitable banks. This has implications for the IASB and the FASB as they prescribe the adoption of the more judgment-based expected loss model in IFRS 9 and the corresponding US GAAP standard (ASC topic 326), as well as for supervisory authorities that will enforce these standards.
Ämne (baseras på Högskoleverkets indelning av forskningsämnen):
SAMHÄLLSVETENSKAP ->
Ekonomi och näringsliv ->
Företagsekonomi
Nyckelord:
Banks, Credit losses, Enforcement, Incentives, Judgment
Postens nummer:
241868
Posten skapad:
2016-09-16 13:07

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