Skip to Main content Skip to Navigation
Conference papers

Loan Loss Provisions and Earnings Management under IFRS 9: An International Evidence

Abstract : Purpose – This study aims to empirically examine the post-adoption effects of IFRS 9 on loan loss provisions and earnings management. We extend our analysis to examine the moderating effect of country-level governance on earnings management. Design/methodology/approach – Using a sample of listed commercial banks in Europe and Sub-Saharan Africa, the authors employ varying econometric tests and panel regressions to investigate the hypotheses. Findings – The findings show significant decline in loan loss provisions post-IFRS 9 adoption and decrease in earnings management across the full sample. Partitioned into sub-samples to explore potential economic heterogeneity, we report mixed evidence of higher and decreased earnings management in Europe and Sub-Saharan Africa respectively. Also, governance quality moderates earnings management. Practical implications – The findings reveal that post-IFRS 9, the propensity to engage in earnings management partly depends on bank size and is imperative for regulators and supervisors to closely monitor the activities of larger banks. Second, strengthening governance and institutional quality is essential to leverage the desired benefit of IFRS 9. Finally, the findings are relevant to regulators, standard setters and stakeholders with keen interest in evaluating the post-adoption effects of IFRS 9. Originality/value – To the best of the authors’ knowledge, this paper is the first cross-country study to empirically examine the post-adoption effects of IFRS 9. Another novelty lies in the distinct contexts of developed and developing economies which enhances the generalizability of the findings to other settings which have adopted IFRS 9. The authors also add to the literature on the discretionary use of loan loss provisions for earnings management.
Document type :
Conference papers
Complete list of metadata
Contributor : Daniel Taylor Connect in order to contact the contributor
Submitted on : Friday, May 27, 2022 - 1:10:40 AM
Last modification on : Friday, June 17, 2022 - 3:49:40 PM


  • HAL Id : hal-03679725, version 1



Daniel Taylor, François Aubert. Loan Loss Provisions and Earnings Management under IFRS 9: An International Evidence. 1st Annual Conference of Academy of Sustainable Finance, Accounting, Accountability & Governance (ASFAAG), Dec 2021, Online, United Kingdom. ⟨hal-03679725⟩



Record views