Relationships among earnings quality, bank monitoring, and cost of bank loans: evidence from Japan

Yusuke Takasu

International Journal of Economics and Accounting, 2021, vol. 10, issue 2, 204-230

Abstract: Earnings quality is frequently used as a proxy for information risk in accounting contexts. Following previous literature, I analyse the relationship between earnings quality and the cost of bank loans in Japan. I hypothesise and test how bank monitoring affects the relationship between earnings quality and the cost of loans. I find that total earnings quality, innate earnings quality generated from economic fundamentals, and discretionary earnings quality driven by managerial discretion over accounting affect the cost of bank loans. Additionally, I find that bank monitoring mitigates the effect of discretionary earnings quality on loan pricing. Empirical results support my predictions grounded in information risk and previous banking literature. Introducing bank monitoring to my research confirms and extends the previous literature.

Keywords: earnings quality; accruals quality; bank monitoring; information risk; cost of bank loans; Japan. (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=115205 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijecac:v:10:y:2021:i:2:p:204-230

Access Statistics for this article

More articles in International Journal of Economics and Accounting from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().