This paper investigates the extent to which banks alter the timing and magnitude of transactions such as asset sales, loan loss accruals, pension settlements and securities issues in response to primary capital, tax, and earnings goals. The authors hypothesize that each year bank managers face a...

This paper examines three motivations for leveraged ESOP adoption: as a takeover defense, as a mechanism for providing incentives to employees and as a vehicle for tax savings. ESOP adoption is more likely for companies with a higher predicted probability of takeover, but ESOP adopters have many...

This study examines whether accounting changes result in changes in the economic behaviour of financial institutions. The results of several papers examining how banks respond to accounting changes that affect their regulatory capital ratios are consistent with Furfine's (2000) summary that...

This study examines SFAS 142 adoption decisions focusing on the trade-off between recording certain current goodwill impairment charges below-the-line versus uncertain future impairment charges included in income from continuing operations. We examine several potentially important economic...

Performance pricing links the interest rate spread on bank debt to a borrower's performance via two options. It gives borrowers an option to reduce interest rates if credit quality improves, and it gives lenders an option to receive higher interest rates if credit quality deteriorates. Contracts...

There is a documented empirical regularity that publicly-held firms report fewer small losses and fewer small declines in earnings than expected. This paper betters our understanding of this observed phenomenon by testing for this regularity on a sample of public and private banks during...

In this paper we examine the decision to include performance pricing in lending contracts and we examine how that decision affects the spread that is charged on the loan. We find that contracts are more likely to include this feature when moral hazard costs are expected to be higher, uncertainty...

In this paper we examine the ex-ante importance of accounting changes in debt contracts by examining how the exclusion of the flexibility to make voluntary and mandatory accounting changes from the calculation of covenant compliance affects the interest rate charged on the loan. After...