Work

Accounting conservatism, and bank loan contracts: Evidence from China

Year: 2014

Type: article

Abstract: Accounting conservatism plays an important role in bank loan contracts. A high degree of accounting conservatism can reduce the risks faced by bank lenders through reporting losses in a timely manner. Banks may then offer preferential policies to borrowers. This paper investigates this hypothesis, using hand-collected data on bank loans granted to Chinese A-share listed companies from 2000 to 2007. The empirical results show that companies with stronger conservatism tend to obtain larger loan amounts with lower interest rates and longer maturities. In addition, we find that the effect of accounting conservatism on bank loans is more significant in regions with better legal environments, more preferential policies, and less intervention from the local government.

Source: China Journal of Accounting Studies

DOI: 10.1080/21697213.2014.945131

Authors: Gang Zhao, Shangkun Liang, Yutao Wang

Institutions: Changzhou University, Central University of Finance and Economics

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: bronze

Funder: National Natural Science Foundation of China

Award: 信息环境变化对海内外分析师行为及其差异影响研究