Research On The Impact Of Earnings Management And Signal Transmission On The Loan Loss Preparation

At present,the complexity of the credit risk management and control in China's banking industry is gradually increasing,coupled with the complex and volatile external economic and financial environment and risk situation.In order to maintain the stability of commercial banks and financial conditions and prevent potential credit risks,in recent years,domestic Constantly put forward higher capital supervision requirements and more perfect loan loss preparation system to ensure the stability of the financial system.However,the amount of provision for loan loss prepared by commercial banks will be affected by the subjective consciousness of managers to a certain extent.On the one hand,for the purpose of profit smoothing,commercial bank managers may use provision for loan losses to prepare for earnings management;On the other hand,provision for loan loss provisions may be affected by signaling motivation,and managers will use it to convey potential information such as the future earnings and risk profile of commercial banks.This paper mainly studies from these two aspects,and it can analyze the degree of influence of the subjective aspects of the loan loss preparation to a certain extent.This is particularly important for the regulatory authorities and stakeholders.In this paper,firstly,domestic and international literature on loan loss preparation in accrual methods,pro-cyclicality,earnings management,and signal transmission relations are reviewed.Based on this,relevant concepts and theories of earnings management and signal transmission are made.Further theoretical analysis and review of the historical development of China's loan loss preparation system.Secondly,this paper selected some commercial banks in China as research objects and selected relevant data,proposed research hypotheses and defined relevant variables,constructed a regression model,descriptive statistics and correlation analysis of variables,and divided commercial banks into national ones.Commercial banks,city commercial banks,listed commercial banks,and non-listed commercial banks conducted two-group regression,conducted comparative analysis and reached conclusions.Through analysis,this paper finds that the accrual of loan loss provisions of China's commercial banks is affected by obvious earnings management motivation and negative signal transmission,and that listed commercial banks and national commercial banks are more affected by earnings management incentives.However,non-listed commercial banks and city commercialbanks are more affected by negative signal transmission.Finally,based on the research results,this paper puts forward suggestions on establishing and improving the risk management system and supervision system for loan losses prepared by commercial banks,enhancing the analysis capabilities of market investors,and strengthening the disclosure of information on loan loss provisions,and explains at the end.The limitations of this article and its outlook for future research.