Earnings Management: New Evidence From Bank Holding Companies

32 Pages Posted: 3 Apr 2019

See all articles by Tarun K. Mukherjee

Tarun K. Mukherjee

University of New Orleans

Elisabeta Pana

Central Connecticut State University

Date Written: January 14, 2019

Abstract

In this paper, we investigate the role played by the organizational structure of bank holding companies in the earnings management of bank subsidiaries. Our results suggest that bank holding companies manage their subsidiaries to optimize the reporting outcome at the consolidated level. We find that parent characteristics explain the earnings management of subsidiaries over and above the characteristics of subsidiaries. We also find that subsidiary’s integration, the public status of bank holding companies and the distance between subsidiaries and headquarters explain the proclivity of bank subsidiaries to engage in earnings management. Our results yield important insights on the drivers of earnings management within bank holding companies and highlight the need for their integration in regulatory design.

Keywords: financial institutions, earnings management, financial crisis

JEL Classification: G01, G11, G21, G28, M40

Suggested Citation

Mukherjee, Tarun K. and Pana, Elisabeta, Earnings Management: New Evidence From Bank Holding Companies (January 14, 2019). Available at SSRN: https://ssrn.com/abstract=3350740 or http://dx.doi.org/10.2139/ssrn.3350740

Tarun K. Mukherjee

University of New Orleans ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

Elisabeta Pana (Contact Author)

Central Connecticut State University ( email )

1615 Stanley Street
New Britain, CT 06050
United States

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