 The role of bank monitoring in corporate governance: Evidence from borrowers' earnings management behaviorSungyoon Ahn and Wooseok Choi Journal of Banking & Finance, 2009, vol. 33, issue 2, 425-434 Abstract: In this paper, we examine the corporate governance role of banks by investigating the effect of bank monitoring on the borrowers' earnings management behavior. Our analyses suggest that a borrowing firm's earnings management behavior generally decreases as the strength of bank monitoring increases. The strength of bank monitoring is measured as (1) the magnitude of a bank loan, (2) the reputation (rank) of a lead bank, (3) the length of a bank loan, and (4) the number of lenders. These results imply that bank monitoring plays an important role in the corporate governance of bank-dependent firms. We further examine other bank loan characteristics (collateral, refinancing, loan types, and loan purposes) and their effects on borrowers' earnings management behavior. Our analyses show that collateral and loan types are significantly associated with borrowers' earnings management behavior while refinancing and loan purposes have no association. Keywords: Bank; monitoring; Bank; loans; Corporate; governance; Earnings; management (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:33:y:2009:i:2:p:425-434 Access Statistics for this article Journal of Banking & Finance is currently edited by Ike Mathur More articles in Journal of Banking & Finance from Elsevier |
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