{"title":"Expected credit losses and managerial discretion. Current practices and future challenges","authors":"Riccardo Macchioni, Alessandra Allini, M. Prisco","doi":"10.3280/maco2021-003006","DOIUrl":null,"url":null,"abstract":"This paper examines the loan loss provisioning behaviour during the transition from IAS 39 to IFRS 9 for a sample of 403 banks in 27 countries in European Union. The objective of the study is to investigate whether during the first years of adoption of the new expected credit loss (ECL) impairment model banks are more en-couraged to smooth earnings and manage capital, compared to the previous in-curred loss (ICL) model. Results show that under ECL, banks adopt a more ag-gressive opportunistic behaviour in accordance with the income-smoothing and capital management approach. Management should be aware of this to implement monitoring and control systems, increasing trustworthiness of financial in-formation for investors' expectations.","PeriodicalId":45634,"journal":{"name":"Journal of Management Control","volume":"1 1","pages":""},"PeriodicalIF":2.1000,"publicationDate":"2021-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Management Control","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.3280/maco2021-003006","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"MANAGEMENT","Score":null,"Total":0}
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Abstract
This paper examines the loan loss provisioning behaviour during the transition from IAS 39 to IFRS 9 for a sample of 403 banks in 27 countries in European Union. The objective of the study is to investigate whether during the first years of adoption of the new expected credit loss (ECL) impairment model banks are more en-couraged to smooth earnings and manage capital, compared to the previous in-curred loss (ICL) model. Results show that under ECL, banks adopt a more ag-gressive opportunistic behaviour in accordance with the income-smoothing and capital management approach. Management should be aware of this to implement monitoring and control systems, increasing trustworthiness of financial in-formation for investors' expectations.
期刊介绍：
Journal of Management Control (JoMaC) is an international journal concerned with the formal, information-based routines and procedures managers use to maintain or alter patterns in organizational activities. Particular emphasis is placed on operational and strategic planning and control systems and the processes and techniques. JoMaC was founded in 1990 as a German journal and has a strong reputation as a dedicated academic journal open to high-quality research on all aspects of management control. The journal covers such topics as: the role of management control systems in the management of companies and non-profit organizations; the design and use of planning systems for production, marketing, logistics and other fields of use; the interaction between strategic and operational aspects of management control; the role of management accountants and other internal and external service providers, such as financial accountants, auditors and consultants; change and the sustainability of management control systems. Journal of Management Control especially welcomes empirical and analytical papers reflecting both methodological rigor and practical relevance that make a significant contribution to literature. The journal is interested in literature reviews and meta-analyses showcasing and promoting current academic research. Additional materials relating to papers of interest to scholars (e.g. coding sheets, questionnaires, data, etc.) can be downloaded from our website in order to stimulate future research.Officially cited as: J Manag Control
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