scholarly journals The valuation effects of bank loan ratings in the presence of multiple monitors

2006 ◽  
Vol 30 (3) ◽  
pp. 325-346 ◽  
Author(s):  
Thomas O. Meyer ◽  
Wei-Huei Hsu ◽  
Fayez A. Elayan
Keyword(s):  
Bank Loan ◽  
Valuation Effects ◽  
Multiple Monitors

The Effect of Bank Reputation on the Value of Bank Loan Agreements

1997 ◽  
Vol 12 (1) ◽  
pp. 83-100 ◽  
Author(s):  
Shane A. Johnson
Keyword(s):  
Firm Value ◽  
Bank Loan ◽  
Loan Loss ◽  
High Quality ◽  
Investment Bankers ◽  
Loan Loss Provision ◽  
Valuation Effects ◽  
Client Firm ◽  
Loan Announcements ◽  
Bank Loan Announcements

I examine the effect of bank characteristics on changes in client firm value occasioned by bank loan announcements to assess the importance of commercial bank reputation. I find that valuation effects are positively related to bank deposit size and capital ratio, and inversely related to the loan loss provision ratio. The results imply that high-quality firms that need to raise external capital have an incentive to develop relationships with large, high-quality banks to avoid pooling with other bank loan customers or issuers of public securities. The results suggest that, despite regulation, the market does not view banks as a uniform set of suppliers of capital. Instead, in a manner consistent with previous empirical findings for auditing firms and investment bankers, variation among commercial banks facilitates the market's ability to differentiate among firms.

Discretionary Accruals in Italian Private Firms and Non-Linear Bank Loan Granting

2017 ◽  
pp. 83-99
Author(s):  
Elisabetta Mafrolla ◽  
Viola Nobili
Keyword(s):  
Financial Reporting ◽  
Banking System ◽  
Regulatory System ◽  
Discretionary Accruals ◽  
Bank Loans ◽  
Bank Loan ◽  
Banking Union ◽  
Private Firms ◽  
European Banking Union

This paper investigates whether and at what extent private firms reduce the quality of their accruals in order to signal a better portrait to the bank and obtain new or larger bank loans. We measure earnings discretionary accruals of a sample of Italian private firms, testing whether new and larger bank loans are associated with a higher (lower) quality of earnings in borrowers' financial reporting. We study bank loan levels and changes and how they impact discretionary accruals and found that, surprisingly, private firms' discretionary accruals are systematically positively affected by an increase in bank loans, although they are negatively affected by the credit worthiness rating assigned to the borrowers. We find that the monitoring role of the banking system with regard to the adoption of discretionary accruals is effective only when the loan is very large. This paper may have implications for policy-makers as it contributes to the understanding of the shortcomings of the banking regulatory system. This is an extremely relevant issue since the excessive amount of non-performing loans held by Italian banks recently threatened the stability of the European Banking Union as a whole.

The Determinants of Merger Withdrawals’ Abnormal Returns in The Australian Market

2015 ◽  
pp. 89-110 ◽  
Author(s):  
Thuy Nguyen Thu ◽  
Giang Dao Thi Thu ◽  
Hoang Truong Huy
Keyword(s):  
Financial Crisis ◽  
Event Study ◽  
Abnormal Returns ◽  
Market Response ◽  
Crisis Period ◽  
Valuation Effects ◽  
Event Study Method ◽  
Private And Public ◽  
Method Of Payment ◽  
The Impact

This paper examines the abnormal returns in merger withdrawals in Australia, especially distinguishing the market response between private and public targets. We also study the determinants of those abnormal returns, including the method of payment and the impact of financial crisis periods. Using the event study method, we document that in the Australian context, the announced withdrawal of mergers involving private targets creates significantly negative valuation effects in comparison with the valuation effects in withdrawal of mergers involving public targets. We also find that a financial crisis period strongly affects abnormal returns of merger withdrawals. However, the method of payment does not have any impact on the abnormal returns.

Biases in estimating bank loan default probabilities

2005 ◽  
Vol 7 (4) ◽  
pp. 75-102 ◽  
Author(s):  
Thomas Mählmann
Keyword(s):  
Bank Loan ◽  
Loan Default
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