Bank-Firm Relation Changes and Earnings Quality - An Analysis on Italian Small-Medium Sized Companies

25 Pages Posted: 28 Nov 2007

See all articles by Giovanni Fiori

Giovanni Fiori

Luiss Guido Carli University

Riccardo Tiscini

Universitas Mercatorum

Francesca di Donato


Date Written: March 2007


In the last years banks and firms relationship in Italy has experienced deep changes due to a new revised national and international regulation and to an increasing globalization of economic environment.

These evolutions imply a new bank-firm relationship with a deeper disclosure, in a perspective of partnership between them.

In this scenario, Basel 1 and 2 accords have been contributing to revise bank-firm relationship, moreover in the specific perspective of small-medium sized firms.

In Italy, the evolution of bank-firm relation has been also influenced by an intensive banking system restructuring process, characterized by big mergers and small local banks aggregations.

This paper focuses on bank-firm relation impact on small-medium sized firms financial reporting quality.

The analysis empirically examines some proxies for earnings quality for a sample of Italian small-medium sized firms over 10 years period. Earnings quality metrics are based on the relation between working capital accruals and cash flows, following Dechow and Dichev (2002) approach.

Across these metrics we will perform a cross-sectional analysis on the relation between earnings quality and some variables regarding banks and firms governance, controlling for regulation changes and other variables such as size, sector etc.

Keywords: Earnings quality, Banks concentration, small medium sized companies

JEL Classification: M41, M43, M47, G21, G34

Suggested Citation

Fiori, Giovanni and Tiscini, Riccardo and di Donato, Francesca, Bank-Firm Relation Changes and Earnings Quality - An Analysis on Italian Small-Medium Sized Companies (March 2007). Available at SSRN: or

Giovanni Fiori (Contact Author)

Luiss Guido Carli University ( email )

viale Pola 12
Roma, Roma 00198

Riccardo Tiscini

Universitas Mercatorum ( email )

Via Appia Pignatelli, 62
Rome, 00178

Francesca Di Donato

UNINT ( email )

Via Cristoforo Colombo 200
Roma, Roma 00100

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