Scholarlink

<p>When foreign banks establish lending relationships with local firms, their lending strategies differ from those of domestic banks, influencing local firms’ earnings management behavior. As foreign banks gain experience, information asymmetry with local firms declines, reducing firms’ incentives to manipulate earnings. While prior studies have largely examined this relationship in a static setting, this paper develops a dynamic theoretical model to explain how foreign banks’ lending experience affects local firms’ earnings management and then tests these predictions empirically. The results support the model’s predictions: foreign banks’ initial screening of large firms increases earnings management in the early phase of lending, whereas accumulated relationship and lending experience mitigate it over time. The findings highlight the dynamic interaction between bank learning and firm reporting behavior, providing new insight into how foreign bank experience shapes corporate financial transparency.</p>

错误：搜索内容不能为空，请输入英文关键词
错误：关键词超出字数限制，请精简
高级检索

Earnings management by local firms: A dynamic model

  • 期刊论文

  • 发表日期：

    2026年3月12日

查看全文
  • Sang Hoo Bae,
  • Sangwook Lee

摘要

When foreign banks establish lending relationships with local firms, their lending strategies differ from those of domestic banks, influencing local firms’ earnings management behavior. As foreign banks gain experience, information asymmetry with local firms declines, reducing firms’ incentives to manipulate earnings. While prior studies have largely examined this relationship in a static setting, this paper develops a dynamic theoretical model to explain how foreign banks’ lending experience affects local firms’ earnings management and then tests these predictions empirically. The results support the model’s predictions: foreign banks’ initial screening of large firms increases earnings management in the early phase of lending, whereas accumulated relationship and lending experience mitigate it over time. The findings highlight the dynamic interaction between bank learning and firm reporting behavior, providing new insight into how foreign bank experience shapes corporate financial transparency.