For the evaluation of banks¡¦ performance, non-performing loans ratio and capital adequacy ratio are the two major indicators other than earnings performance. Among the various tools for earnings manipulation, loan loss provisions may be the only one that could affect bank¡¦s earning numbers, non-performing loans ratio and capital adequacy ratio simultaneously. In order to satisfy the need to increase earnings and capital adequacy ratio and to decrease non-performing loans ratio, banks may have motivation to conduct earnings management. The purpose of the study is thus to investigate whether there is a relationship between the earnings management by using the discretionary loan loss provisions and the earnings before loan loss provisions, non-performing loans ratio, capital adequacy ratio, asset size, loan growth rate, and loans uncollected.
In addition, the study divides the sample banks into the following categories: (1) commercial banks versus others, (2) new banks versus old banks (based on the time the bank was founded), and (3) state-run versus non-state-run (based on whether the president of the bank is appointed by the government). The study also intends to examine whether earnings management conducted by the bank¡¦s management is different between the various categories.
Based on the empirical results from the Taiwan Economics Journal (TEJ) database, the study found: (1) the three variables of earnings before loan loss provisions, asset size, and loans uncollected are significantly related to the earnings management by using discretionary loan loss provisions, and the higher the three variables, the higher the degree of earnings management; (2) non-performing loans ratio, capital adequacy ratio, and loan growth rate are not found to be significantly related to the earnings management by using discretionary loan loss provisions; (3) state-run banks have conducted more earnings management than non-state-run banks; and (4) there is no significant result found in other analyses for other categories.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0626104-141234 |
| Date | 26 June 2004 |
| Creators | Shen, Wen-hua |
| Contributors | Yuan-xing Liao, Pei-how Huang, Ruey-dang Chang |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | Cholon |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0626104-141234 |
| Rights | campus_withheld, Copyright information available at source archive |
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