La calidad de la información contable de las instituciones financiera europeas: la gestión del resultado

This doctoral thesis examines three general goals: (i) to investigate those factors that have an impact on the quality of accounting information, particularly the role of prudential supervisors on banking accounting practice; (ii) to analyze the relationship between the business cycle and the earnings management of banks, especially, income smoothing practices; and (iii) to look into the association between loan loss accounting and credit supply behavior. The motivations that led us to undertake the development of this research project are the following ones. Firstly, the importance of the financial sector in the economy. Financial firms have special features, and because of that they are supervised and also regulated by the prudential supervisory authorities. Secondly, the importance of the quality of the accounting information for an efficient market. Thirdly, the accounting regulation change, in particular, the implementation of the incurred loss model according to the adoption of the International Accounting Standard 39 (IAS 39) in 2005, by the Regulation 1606/2002/EC of the European Parliament and the Council. Fourthly, loan loss accounting should be considered in the general context of business cycle and management's behavior through the cycle. In view of this motivations, the achievement of the general objectives which have been previously presented are materialized by two empirical studies. The first one examines the role of the prudential organisms on the income smoothing behavior of European listed banks after IAS 39 adoption. In particular, we are interested in two main features of banking supervisors: (i) supervisory power, and (ii) legal independence of the supervisor, the latter being not studied to date with respect to earnings management. The second work analyzes the effect of the most recent financial crisis on banks' procyclical behavior. To do so, we use the consolidated financial statements of a commercial banks sample from 14 European economies. Data has been collected from THOMSON ONE database spanning 2000 to 2013. In the case of the first study, the results show that effectively the implementation of the incurred loss model of the IAS 39 reduces income smoothing practices through using loan loss impairments. Despite this, European listed banks still smooth earnings in general. This reduction is lower where the supervisor may make more pressure (more powerful), however, this effect is mitigated by the legal independence of the supervisor, both from the government and the industry. In this sense, we add an additional variable to the actual debate about the characteristics of the governance of the Single Supervisory Mechanism. The results from the second study demonstrate that income smoothing practices depend on the intensity of the crisis, that is, banks smooth earnings in a greater extent when crisis turns into more aggressive (subprime crisis 2008-2009), but they do not when crisis become more moderate instead (sovereign debt crisis 2010-2013). With respect to the relationship between loan losses and credit fluctuation, whereas the non discretionary component of loan losses amplifies credit cycle, the discretionary component expand credit in general, however, in downturn we do not find evidence that banks' managers use the discretionary component of loan losses as a countercyclical tool to supply more credit. So that, the main implications of this study are: first, loan loss accounting may not be isolated from neither the business cycle nor credit management; second, earnings management change over time, as the demand of information adapts to the uncertainty level; and third, prudential perspective on loan loss accounting might be inappropriate, as the goals of the prudential authorities differ from those adopted by the accounting standard setters. The doctoral thesis is structured as follows. The first section, which consists of three chapters (Chapter II, Chapter III and Chapter IV), represents the theoretical framework which the research work is based on, where we develop the institutional and regulatory framework of financial firms, a detailed review of previous literature about the quality of the accounting information, in particular, earnings quality, and more precisely income smoothing practice through using loan loss impairments, and finally the relation between the banking sector and business cycle, in which a detailed explanation of the recent financial crisis will take place. In the second sections, Chapters V and VI include both empirical studies related to stated objectives. Lastly, Chapter VI presents final considerations that come from this research project and the potential future lines of research.