Banking reform, risk-taking, and earnings quality – Evidence from transition countries

Arbeitspapier

​The dynamic banking reforms of Central and Eastern Europe (CEE) following the collapse of the Soviet Union provide an ideal research setting for examining the causal effect of institutional development on financial reporting. Using five earnings quality measures, we consistently find that banking reform improves accounting quality and reduces earnings management incentives in the 16 transition countries considered. The results strongly hold in our within-country and difference-in-difference models, as well as in non-parametric analyses. We also find supporting evidence for the notion that excessive risk-taking of banks impairs earnings quality. As a result, banking reform improves earnings quality partially through its ability to curb risk-taking behavior. Publication

Object Details

• ISBN: 978-952-323-003-3
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: BOFIT Discussion Papers ; No. 19/2014

Classification and Topics

• Classification: Wirtschaft ; General Financial Markets: Government Policy and Regulation ; Accounting ; Accounting and Auditing: Government Policy and Regulation ; Corporate Finance and Governance: Government Policy and Regulation ; Monetary Policy, Central Banking, and the Supply of Money and Credit: General ; International Financial Markets
• Subject: earnings management ; earnings quality ; institutional development ; bank risk-taking

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fang, Yiwei ; Hasan, Iftekhar ; Li, Lingxiang
• Event: Veröffentlichung
• (who): Bank of Finland, Institute for Economies in Transition (BOFIT)
• (where): Helsinki
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/212805
• Last update: 10.03.2025, 11:42 AM CET