Loan Loss Provisions and Earnings Management under IFRS 9: An International Evidence
Résumé
This paper examines the impact of IFRS 9 adoption on loan loss provisions, earnings management and the moderating effect of country-level governance on earnings management. The findings show significant decline in loan loss provisions post-IFRS 9 and decrease in earnings management across the full-sample. Partitioned into sub-samples, we report mixed evidence of higher and decreased earnings management in Europe and Africa. Country-level governance moderates earnings management. We make a novel contribution to the literature as one of the first cross-country studies to evaluate the post-adoption effects of IFRS 9. Post-IFRS 9, the propensity to engage in earnings management partly depends on bank size and is very imperative for regulators to closely monitor the activities of larger banks.