Can banks identify firms’ real earnings management? Evidence from China

Yuanhui Li, Weiqian Nie, Erwei Xiang and Hadrian Geri Djajadikerta

Finance Research Letters, 2018, vol. 25, issue C, 23-29

Abstract: This paper investigates the impact of real earnings management on bank lending decisions and the moderation effects of state ownership and marketization in China. We find (1) firms with higher real earnings management get more and lower-cost loans, which indicates that banks cannot identify firms’ real earnings management; (2) state-owned enterprises (SOEs) with higher real earnings management obtain more loans, while non-SOEs with higher real earnings management are more likely to obtain low-cost loans; (3) firms in regions with lower degree of marketization are more likely to get more and low-cost loans via real earnings management.

Keywords: Real earnings management; Bank loans; State ownership; Marketization (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:25:y:2018:i:c:p:23-29

DOI: 10.1016/j.frl.2017.10.005

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