EconPapers    
Economics at your fingertips  
 

Shareholder power and income smoothing in Central European banks

Tamara Bińczak, Filip Kaczmarek and Dorota Skała
Additional contact information
Tamara Bińczak: Warsaw School of Economics, Collegium of Economic Analysis
Filip Kaczmarek: Warsaw School of Economics, Collegium of Economic Analysis
Dorota Skała: University of Szczecin, Faculty of Economics and Management

Collegium of Economic Analysis Annals, 2018, issue 53, 117-130

Abstract: We study the process of using loan loss provisions to smooth bank net income in the context of corporate governance structures. Using financial and shareholder data for above 200 banks from Central Europe in the period 2003–2014, we confirm that corporate governance matters for loan loss provision policy. In particular, we find that banks where the primary shareholder is a full owner are more prone to engage in income smoothing than their peers. The mere fact of having one primary shareholder does not provide sufficient incentives for banks to smooth earnings. Once the shareholder stake exceeds the full ownership benchmark, the smoothing process intensifies. Our results have significant policy implications, especially in regions such as Central Europe, where majority and full ownership are a prevailing corporate governance structure in banking systems.

Keywords: income smoothing; corporate governance; Central European banks (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://rocznikikae.sgh.waw.pl/p/roczniki_kae_z53_07.pdf Full text (application/pdf)

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:sgh:annals:i:53:y:2018:p:117-130

Access Statistics for this article

Collegium of Economic Analysis Annals is currently edited by Joanna Plebaniak, Beata Czarnacka-Chrobot

More articles in Collegium of Economic Analysis Annals from Warsaw School of Economics, Collegium of Economic Analysis Contact information at EDIRC.
Bibliographic data for series maintained by Michał Bernardelli ().

 
Page updated 2018-10-25
Handle: RePEc:sgh:annals:i:53:y:2018:p:117-130