Abstract
This study examines the relationship between financial statement comparability and bank risk-taking. Our analysis of a sample of publicly listed U.S. banks over the 1994–2019 period shows that banks with more comparable financial statements are related to significantly less risk-taking. We also find that the negative relationship between comparability and risk-taking is more pronounced for firms with more severe moral hazard and agency problems. Our documented findings are robust across alternative measures of comparability and risk-taking and considering change analysis, after controlling for strength of corporate governance and using propensity score matching and two-stage least squares estimation to address endogeneity concerns. Our analysis also shows that the relationship between financial statement comparability and bank risk-taking is stronger for smaller banks than for larger banks. Overall, this study provides unique insights into the role of financial statement comparability in curbing risk-taking in the banking sector.
Original language | English |
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Article number | 100206 |
Pages (from-to) | 1-22 |
Number of pages | 22 |
Journal | Journal of Contemporary Accounting and Economics |
Volume | 16 |
Issue number | 3 |
DOIs | |
Publication status | Published - Dec 2020 |
Keywords
- Financial statement comparability
- Risk-taking
- Size
- Global financial crisis