This paper investigates how banks alter the timing and magnitude of transactions and accruals to achieve primary capital, tax, and earnings goals. Recent research, including Moyer [1990], Scholes, Wilson, and Wolfson [1990], and Collins, Shackelford, and Wahlen [1995], provides evidence that banks execute transactions and manage accruals to achieve some or all of these objectives. A common feature of these studies is the assumption that when managers make a particular accrual or transaction decision, all other decisions are fixed. We relax this assumption and allow such decisions to be determined simultaneously.
Robert M. Bushman, Raffi J. Indjejikian, Abbie Smith, Aggregate Performance Measures in Business Unit Manager Compensation: The Role of Intrafirm Interdependencies, Journal of Accounting Research, Vol. 33, Studies on Managerial Accounting (1995), pp. 101-128