This paper identifies tax and non-tax factors that influence commercial banks conversion from taxable C-corporation to nontaxable S-corporation from 1997 to 1999. A 1996 tax-law change allowed banks to elect S-corporation status for the first time. We find that banks are more likely to convert...

We develop a model to show how shareholder-creditor agency conflicts interact with accounting measurement rules to influence the design of bank capital regulation. Relative to a benchmark autarkic regime, higher capital requirements mitigate inefficient asset substitution, but exacerbate...

This article examines the consequences of accounting policy choices for individual banks' downside tail risk, for the codependence of such risk among banks, and for regulatory forbearance, or the decision by a regulator not to intervene. The author synthesizes recent research that provides...

This article examines the relationship between the amount of information disclosed by bank holding companies (BHCs) and the BHCs' subsequent risk-adjusted performance. Using data from the annual reports of BHCs with large trading operations, the author constructs an index that quantifies the...

This paper investigates the causal effects of voluntary information disclosures on a bank's expected default probability, enterprise risk, and value. I measure disclosure via a self-constructed index for the largest 80 U.S. bank holding companies for the period 1998-2011. I provide evidence that...

In this study, we show that when a firm needs external financing, information quality has real effects via financing contracts on the firm's input to influence its operational outcome. Interestingly, we find that higher information quality decreases overall efficiency. Our analysis highlights...

We empirically explore the link between Level 3 fair value estimates and banks' default risk as well as default costs. Both variables are especially important to banks' creditors and the regulatory authorities that rely on the information in financial statements. In a fixed-effects panel model,...

In this paper, we examine how financial leverage and information quality interactively affect the equilibrium investment and effort decisions, therefore affect overall efficiency. We find that when the financial leverage is in an intermediate range, overall efficiency may decrease in information...

Complementing the recent review of the banking literature in accounting by Beatty and Liao (2014), I offer my own thoughts on the role of financial accounting in banking. I focus my discussion on real effects of accounting policy choices on individual bank risk taking and codependence of risk...

Does enhancing banks' information sets and understanding of credit risks improve loan loss recognition? We study this question using a global dataset of staggered initiations and coverage increases of public credit registries (PCRs). Mandated by national regulators, PCRs collect borrower and...