Real earnings management through syndicated lending
Subject
Accounting
Publishing details
Social Sciences Research Network
Authors / Editors
Ertan A
Biographies
Publication Year
2017
Abstract
I examine banks' management of earnings through syndicated lending activities. This novel setting allows a transaction-specific, within-quarter analysis of real earnings management. My findings suggest that public lenders that narrowly beat earnings benchmarks, to book origination fees, initiate more loans in the last month of fiscal quarters. I also find that this boost in lending is not costless: These loans are offered at a 3–7 percent discount and under-perform. Overall, I provide model-free evidence of real earnings management and quantify its costs. My findings also show that banks' financial reporting objectives influence corporate loan contracting and the real economy
Keywords
Real earnings management; Banking; Lending; Corporate finance; Cost of debt; Benchmark-beating
Series
Social Sciences Research Network