| Loan loss reserve is a kind of value reserve which is used to make up for the expected loan loss from the income of commercial banks.Because it belongs to the nature of accounting estimation,its provision will inevitably be affected by the subjective factors of bank managers to a certain extent.Therefore,the loan loss provision is divided into discretionary loan loss provision and non discretionary loan loss provision.This study focuses on the executive factors that affect the provision of loan loss reserves,namely earnings management.In order to obtain more accurate results,the two-stage method is used to separate the discretionary part from the whole,explore the relationship between earnings management and discretionary loan loss reserves,and analyze the impact of managers’ earnings management on it.This paper takes a total of 658 data from 94 commercial banks in China from2012 to 2018 as the research object for regression analysis,and divides commercial banks into three groups based on asset size,location,and nature of the bank.Regression is performed through comparative analysis in conclusion.On the whole,China’s commercial banks have earnings management behavior,and there is a significant positive correlation between discretionary loan loss provisions and earnings management variables.Among them,the large-asset commercial banks will have more discretionary loan loss provisions due to earnings management than smaller ones.National commercial banks will make more discretionary loan loss provisions than local commercial banks due to earnings management.Commercial banks in the eastern region have more discretionary loan loss provisions than the central and western regions.Based on the above conclusions,this paper makes several suggestions.First,the regulatory authorities should improve the supervisory system for loan loss provisions,reduce the regulatory red line for provision coverage,and improve regulatoryindicators.Secondly,commercial banks should accelerate the establishment of their own "expected credit losses" model,improve internal control,and establish the concept of prudent operation.Finally,for investors,it is necessary to understand the information implied commercial bank manager’s discretionary behavior,interpret and analyze the implicit information of financial data. |
