Bank Monitoring and Accounting Recognition: The case of aging-report requirements
研究贷款协议中要求借款人提供账龄报告后，其会计确认行为的变化，发现银行监控促使借款人采用更保守的会计政策，增加坏账准备并提高披露频率。
We study changes in borrower accounting recognition surrounding initiation of loans requiring the provision of aging schedules to the lender. Our purpose is to understand how scrutiny by lenders of underlying transactions affects financial reporting incentives. We find that allowance for doubtful accounts increases significantly after loan initiation controlling for current and future write-offs, receivable turnover, and the beginning allowance balance. This increase is more pronounced for loans with increased monitoring frequency. We also find that write-offs are less persistent following implementation of bank monitoring, consistent with increased timeliness. Further study of the customer base finds customer concentration declines and credit quality of largest customers improves after initiation of borrowing base loans. Lastly, we find borrowers increase the frequency of allowance-for-doubtful-accounts disclosure in their quarterly financial statements after loan initiation. Our results confirm two notions. Banks add to the oversight that already exists for public, audited companies and banks influence borrowers to adopt more conservative accounting policies.