The effects of bank regulators and external auditors on loan loss provisions

Allison Nicoletti

Journal of Accounting and Economics, 2018, vol. 66, issue 1, 244-265

Abstract: I examine whether bank regulators and external auditors have conflicting effects on loan loss provision timeliness, an accounting choice associated with important economic consequences and a potential conflict between regulators and auditors. In the absence of the other group, auditors and strict regulators are each positively associated with timeliness. However, audits are negatively associated with timeliness when strict regulators are present, consistent with a conflict for which auditors are the dominating group as audited banks attain a similar level of timeliness regardless of the extent of regulatory scrutiny. Collectively, this suggests that regulators and auditors differentially influence loan loss provisions.

Keywords: Banks; Loan loss provisions; Bank supervision; Auditors (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (34)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:66:y:2018:i:1:p:244-265

DOI: 10.1016/j.jacceco.2018.05.003

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