skip to main content
Language:
Search Limited to: Search Limited to: Resource type Show Results with: Show Results with: Search type Index

CURRENT EXPECTED CREDIT LOSS (CECL): THE OTHER SIDE OF THE STORY

ASBBS Proceedings, 2021, Vol.28, p.83-92

Copyright American Society of Business and Behavioral Sciences 2021 ;ISSN: 1934-0583

Full text available

Citations Cited by
  • Title:
    CURRENT EXPECTED CREDIT LOSS (CECL): THE OTHER SIDE OF THE STORY
  • Author: Grealis, Tara ; Henderson, Katelyn ; Tomolonis, Paul A
  • Subjects: Accounting ; Bank management ; Coronaviruses ; COVID-19 ; Earnings ; Earnings management ; Economic crisis ; Estimates ; Financial instruments ; Financial statements ; Loans ; Profits ; Provisions ; Trends
  • Is Part Of: ASBBS Proceedings, 2021, Vol.28, p.83-92
  • Description: Current Expected Credit Loss (CECL), FASB's new accounting standard effective January 2020, is a direct response to the 2008 financial crisis. FASB's intent is for bank management to extend the estimation horizon of the loan loss provision in order to provide a "more accurate" picture of their expected uncollectibility over the entire life of the loans held in portfolio. While this new standard requires the banks to incorporate additional information in their modeling process for their loan loss provision, it also opens up additional opportunities for managerial discretion in the estimation process. We measure this additional discretion using Jones Model discretionary accruals, adapted for the banking sector. Our financial statement data comes from FDIC Call Reports that include both public and private banks and are prepared at the bank level only, unlike SEC financial reports which include financial information of the bank holding companies and other subsidiaries in addition to the bank. We used quarterly Call Report data across the implementation window that includes the advent of CECL (Q1, January - March 2020) to discern the difference in discretionary accruals. Due to the confounding effect of COVID-19, there is only one quarter of relatively unaffected data so we compare Q1 2020 to prior quarters and years. Comparing the periods prior to implementation and post implementation allows us to observe any difference in discretionary opportunities for management. We find additional discretion opportunities available to management in post CECL implementation, which is contrary to FASB's intent.
  • Publisher: San Diego: American Society of Business and Behavioral Sciences
  • Language: English
  • Identifier: ISSN: 1934-0583
  • Source: ProQuest Central
Back to results list
INSPIRE LIBRARY - TON DUC THANG UNIVERSITY (84-028) 37 755 057 Feedback
19 Nguyen Huu Tho St. Dist.7, HCM thuvien@tdtu.edu.vn

Copyright © 2017 INSPIRE LIBRARY - TON DUC THANG UNIVERSITY

Searching Remote Databases, Please Wait