Financial statement comparability and bank risk-taking

Mostafa Monzur Hasan, Adrian (Wai-Kong) Cheung () and Grantley Taylor

Journal of Contemporary Accounting and Economics, 2020, vol. 16, issue 3

Abstract: This study examines the relationship between financial statement comparability and bank risk-taking. Our analysis of a sample of publicly listed U.S. banks over the 1994–2019 period shows that banks with more comparable financial statements are related to significantly less risk-taking. We also find that the negative relationship between comparability and risk-taking is more pronounced for firms with more severe moral hazard and agency problems. Our documented findings are robust across alternative measures of comparability and risk-taking and considering change analysis, after controlling for strength of corporate governance and using propensity score matching and two-stage least squares estimation to address endogeneity concerns. Our analysis also shows that the relationship between financial statement comparability and bank risk-taking is stronger for smaller banks than for larger banks. Overall, this study provides unique insights into the role of financial statement comparability in curbing risk-taking in the banking sector.

Keywords: Financial statement comparability; Risk-taking; Size; Global financial crisis (search for similar items in EconPapers)
JEL-codes: D81 G21 G3 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocaae:v:16:y:2020:i:3:s1815566920300230

DOI: 10.1016/j.jcae.2020.100206

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