Competition and Bank Opacity

Review of Financial Studies, forthcoming

44 Pages Posted: 11 Dec 2014 Last revised: 12 Feb 2016

See all articles by Liangliang Jiang

Liangliang Jiang

Hong Kong Polytechnic University

Ross Levine

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Chen Lin

The University of Hong Kong - Faculty of Business and Economics

Multiple version iconThere are 3 versions of this paper

Date Written: February 5, 2016

Abstract

Did regulatory reforms that lowered barriers to competition increase or decrease the quality of information that banks disclose to the public? By integrating the gravity model of investment with the state-specific process of bank deregulation that occurred in the United States from the 1980s through the 1990s, we develop a bank-specific, time-varying measure of deregulation-induced competition. We find that an intensification of competition reduced abnormal accruals of loan loss provisions and the frequency with which banks restate financial statements. The results suggest that competition reduces bank opacity, potentially enhancing the ability of markets to monitor banks.

Keywords: Earnings management; Financial accounting; Bank deregulation; Corporate Governance

JEL Classification: G21; G28; G34; G38

Suggested Citation

Jiang, Liangliang and Levine, Ross Eric and Lin, Chen, Competition and Bank Opacity (February 5, 2016). Review of Financial Studies, forthcoming. Available at SSRN: https://ssrn.com/abstract=2536290 or http://dx.doi.org/10.2139/ssrn.2536290

Liangliang Jiang

Hong Kong Polytechnic University ( email )

11 Yuk Choi Rd
Hung Hom
Hong Kong

Ross Eric Levine (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Chen Lin

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Register to save articles to
your library

Register

Paper statistics

Downloads
323
Abstract Views
1,736
rank
75,071
PlumX Metrics