Competition or manipulation? An empirical evidence of determinants of the earnings persistence of the U.S. banks

Chi-Hsiou Daniel Hung; Yuxiang Jiang; Frank Hong Liu; Hong Tu

doi:10.1016/j.jbankfin.2018.01.010

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Journal of Banking & Finance Vol. 88 2018

Competition or manipulation? An empirical evidence of determinants of the earnings persistence of the U.S. banks

Chi-Hsiou Daniel Hung^1,2; Yuxiang Jiang^1,2; Frank Hong Liu³; Hong Tu⁴

¹ Adam Smith Institute · ² University of Glasgow · ³ University of Aberdeen · ⁴ Nankai University

open access

Abstract

We examine the impact of competition on bank earnings persistence by exploiting a natural experiment following interstate banking deregulation that increased bank competition. We find that bank earnings adjustment speed increases after their states implement the deregulation. This relationship is weakened, however, with the increase of bank's abilities to sustain earnings, as reflected in size, diversification, managerial efficiency and safety. We further find that the impact of compeititon on bank earnings adjustment speed is direct but not indirectly through the channel of earnings management.

DOI: 10.1016/j.jbankfin.2018.01.010
Volume: 88
Pages: 442-454
Language: en
Sources: openalex crossref bibtex:phds-export.bib

Competition or manipulation? An empirical evidence of determinants of the earnings persistence of the U.S. banks

Abstract

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