| Summary: | 碩士 === 靜宜大學 === 財務金融研究所 === 97 === A number of recent policy initiatives have called for enhanced transparency of banking industry, such as Pillar 3 of New Basel Accord requiring the bank’s more disclosure of financial information in year of 2001. Concurrently, all listed financial institutions in Taiwan were required to disclosure the important financial information quarterly in the network, including asset quality, management information, profitability, and market risk sensitivity except for the financial statements. In this paper, we try to investigate the relationship between financial reporting transparency and earnings management in Taiwan’s banking industry for the period 2001 through 2004. This study will examine whether and to what extent banks in Taiwan use loan loss provisions (LLPs) for earnings management. We hypothesize that the extent of earnings management is negatively related to information transparency. Following Poshakwale and Courtis (2005), we develop a disclosure index to measure the extent of each sample bank’s information transparency. Our results indicate that banks in Taiwan use LLPs to manage earnings. Furthermore, our findings are consistent with the prediction that the highly degree of bank disclosure will reduce the extent of earnings management.
|
|---|
