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JRFM
Special Issues
Earnings Management and Loan Contracts
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Earnings Management and Loan Contracts

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Banking and Finance".

Deadline for manuscript submissions: 31 December 2024 | Viewed by 1381

Special Issue Editor

Dr. Peter Demerjian

E-Mail Website
Guest Editor
School of Accountancy, J. Mack Robinson College of Business, Georgia State University, Atlanta, GA 30303, USA
Interests: debt contracting; managerial ability; financial accounting

Special Issue Information

Dear Colleagues,

Earnings play a critical role in debt contracting, both in helping lenders screen potential borrowers, and allowing lenders to monitor debt contracts to assess borrower performance and compliance with contractual terms. The aim of this issue is to explore the multiple roles of earnings in the debt contracting process and how borrower reporting incentives related to debt affect contract outcomes. We welcome submissions focused on earnings management and debt contracting, for example the role of accounting discretion in the screening and monitoring of borrowers; how earnings smoothing affect debt contract outcomes; how changes in accounting standards and regulation has affected earnings management incentives related to debt; and how emergence of alternative information sources has affected earnings management; and any other related topic. We welcome empirical or theoretical submissions, and encourage novel data sources and methods.

Dr. Peter Demerjian
Guest Editor

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • debt contracting
  • accounting discretion
  • accounting earnings
  • earnings management
  • loan contracting

Published Papers (1 paper)

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Research

19 pages, 841 KiB  
Article
Impacts of the Expected Credit Loss Model on Pro-Cyclicality, Earnings Management, and Equity Management in the Portuguese Banking Sector
by Miguel Resende, Carla Carvalho and Cecília Carmo
J. Risk Financial Manag. 2024, 17(3), 112; https://doi.org/10.3390/jrfm17030112 - 9 Mar 2024
Cited by 1 | Viewed by 1196
Abstract
This article delves into the pro-cyclicality of loan loss provisions (LLPs) and earnings management, along with equity management, in Portuguese banks against the backdrop of implementing the IFRS 9’s expected credit loss (ECL) model. It concentrates on how LLPs mirror economic cycles and [...] Read more.
This article delves into the pro-cyclicality of loan loss provisions (LLPs) and earnings management, along with equity management, in Portuguese banks against the backdrop of implementing the IFRS 9’s expected credit loss (ECL) model. It concentrates on how LLPs mirror economic cycles and financial management practices, providing valuable insights into the operational dynamics of the Portuguese banking sector, marked by distinct economic and regulatory challenges. The research examined a sample of five Portuguese commercial banks, chosen from a group of seventeen in the Portuguese Banking Association. Data spanning from 2013 to 2022 were manually gathered. A multiple linear regression model was employed to scrutinize the relationship between LLPs and variables indicative of economic cycles and the earnings and equity management. The methodology use was a multiple linear regression model. The analysis indicates a pro-cyclicality in LLPs within the Portuguese context, with a positive response of LLPs to economic indicators like unemployment. Contrarily, the extent of earnings and equity management under the ECL model was less marked compared to the incurred credit loss (ICL) model, suggesting the impact of more stringent regulatory measures. The research corroborates the pro-cyclicality of LLPs in Portuguese banks under the ECL framework, underscoring the necessity for ongoing monitoring and refinement of models for forecasting and recognizing credit losses. The findings point to an area for improvement in financial management practices, despite regulatory enhancements, to promote transparency and ensure financial stability. Full article
(This article belongs to the Special Issue Earnings Management and Loan Contracts)
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