Title

Can banks identify firms’ real earnings management? Evidence from China

Document Type

Journal Article

Publisher

Elsevier Inc.

School

School of Business and Law

RAS ID

25542

Comments

Originally published as:

Li, Y., Nie, W., Xiang, E., & Djajadikerta, H. G. (2017). Can banks identify firms’ real earnings management? Evidence from China. Finance Research Letters. Advance online publication. doi:10.1016/j.frl.2017.10.005

Original article available here.

Abstract

This paper investigates the impact of real earnings management on bank lending decisions and the moderation effects of state ownership and marketization in China. We find (1) firms with higher real earnings management get more and lower-cost loans, which indicates that banks cannot identify firms’ real earnings management; (2) state-owned enterprises (SOEs) with higher real earnings management obtain more loans, while non-SOEs with higher real earnings management are more likely to obtain low-cost loans; (3) firms in regions with lower degree of marketization are more likely to get more and low-cost loans via real earnings management.

DOI

10.1016/j.frl.2017.10.005

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