Research On The Impact Of Accounting Earnings Quality On The Bank Credit Decisions

Banking is a high-risk industry. With the economic globalization, the world banking industry has to face with the unprecedented challenges. The study of World Bank group argued that, it is the credit risk that lead to the bank broke. The accounting information is the bridge between banks and enterprises.The authorized agency argued that, because of the asymmetrical information, the bank decision makers use the accounting information to evaluate the ability of enterprises, to decide whether to agree to their loans. Accounting profit information is an important consideration of the loan decision.To get the financial support, the managers will be color of their financial statements to let the accounting data more beautiful. If the bank executives can identify the account surplus quality of different loan applicants, and make corresponding correct decision, to a certain extent, the banks can reduce or avoid credit risks, otherwise, that banks would bear more risk.At present, there has not been a unified view of the definition of the accounting earning quality all over the world. In accordance with the review of the relevant documents, considered the relevance between the definitions and the banks debt contracts, this paper defined the quality of the accounting earnings from three dimensions, which are the steadiness, accrual quality and the earning management. To study whether the banks of our country can identify the difference between the earning quality of different firms, this paper selected 1308 listed companies, used their accounting data from 2007 to 2009,researched whether the earning quality can effect the utility of the earning accounting in debt contracts. The main conclusions as follows:firstly, the steadiness is related to the loan decisions the steadier the earnings is, the stronger the relationship between the loan decisions and the earning information. The decision makers are able to identify different earning persistence, and make the appropriate decisions.Secondly, the bank decision makers don't realize that the accrual quality can affect the usefulness of the accounting information in debt contracts. However, in the long-term loan decision model, the accruals quality affected the loan decisions, the decision makers only ignore that the accrual quality will also affect the accounting quality, and then, effect the accuracy of the decisions. Again, both short-term and long-term loans decisions are effected by the earning management. It means that the banks can realize the relationship between the earning management and the usefulness of the accounting information in debt contracts. However, the result is not stable.Meanwhile, this paper did not find the interdependency between the earning quality and the type of loans. So, the use of the accounting earning information is very limited in the decisions of the loan type.In addition, during the growth of bank loans'time limit, the decision makers could realize the earnings'steadiness, and to the extent, they can distinguish the accrual quality and earnings management.