Competition or manipulation? An empirical evidence of determinants of the earnings persistence of the U.S. banks

Chi-Hsiou Hung (), Yuxiang Jiang, Frank Hong Liu and Hong Tu

Journal of Banking & Finance, 2018, vol. 88, issue C, 442-454

Abstract: We examine the impact of competition on bank earnings persistence by exploiting a natural experiment following interstate banking deregulation that increased bank competition. We find that bank earnings adjustment speed increases after their states implement the deregulation. This relationship is weakened, however, with the increase of bank's abilities to sustain earnings, as reflected in size, diversification, managerial efficiency and safety. We further find that the impact of compeititon on bank earnings adjustment speed is direct but not indirectly through the channel of earnings management.

Keywords: Competition; Geographic expansion index; Earnings persistence; Earnings adjustment speed, Earnings management (search for similar items in EconPapers)
JEL-codes: G20 G21 G38 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:88:y:2018:i:c:p:442-454

DOI: 10.1016/j.jbankfin.2018.01.010

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