Reaction of Bank Stock Prices to Loan-Loss Reserve Announcements

Reaction of Bank Stock Prices to Loan-Loss Reserve Announcements Significant own and contagious stock-price effects of bank LLR announcements exist despite the fact that these accounting adjustments have no concurrent cash-flow implications. Consistent with expected information effects, negative abnormal returns surrounding LLR announcements tend to be much more important in the case of regional as opposed to money-center banks. Accounting measures of bank soundness, and possibly regulatory pressure, appear to influence the market's assessment of LLR information for both announcing and nonannouncing banks. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

Reaction of Bank Stock Prices to Loan-Loss Reserve Announcements

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2000 by Kluwer Academic Publishers
Subject
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
ISSN
0924-865X
eISSN
1573-7179
D.O.I.
10.1023/A:1008376007492
Publisher site
See Article on Publisher Site

Abstract

Significant own and contagious stock-price effects of bank LLR announcements exist despite the fact that these accounting adjustments have no concurrent cash-flow implications. Consistent with expected information effects, negative abnormal returns surrounding LLR announcements tend to be much more important in the case of regional as opposed to money-center banks. Accounting measures of bank soundness, and possibly regulatory pressure, appear to influence the market's assessment of LLR information for both announcing and nonannouncing banks.

Journal

Review of Quantitative Finance and AccountingSpringer Journals

Published: Oct 8, 2004

References

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