TY - JOUR
T1 - Multiple directorships and the extent of loan loss provisions
T2 - Evidence from banks in South Asia
AU - Kutubi, Shawgat S.
AU - Ahmed, Kamran
AU - Khan, Hayat
AU - Garg, Mukesh
N1 - Funding Information:
We gratefully acknowledge the valuable comments from the participants of The Fifth International Conference of the Journal of International Accounting Research (JIAR), Adelaide, Australia. We also thank the participants of the FIRN Women ECR Conference 2018, University of Queensland, Brisbane. We are especially grateful to the two anonymous reviewers and the editor of the Journal of Contemporary Accounting and Economics for their helpful comments and suggestions, which have enriched this paper. We acknowledge the financial assistance that we received from the Asia Pacific College of Business and Law, Charles Darwin University, to support the proof-reading of the paper. We also thank Elsevier Editing Services for their proof-reading service. All errors and omissions are our own.
Publisher Copyright:
© 2021 The Authors
Copyright:
Copyright 2021 Elsevier B.V., All rights reserved.
PY - 2021/12
Y1 - 2021/12
N2 - This paper examines whether directors with multiple directorships affect extent of banks' loan loss provisions in South Asia. Our results indicate that directors with multiple directorships tend to delay the recognition of loan loss provisions. Specifically, we find the existence of a U-shaped relationship between directors with multiple directorships and loan loss provisions, indicating that the delay is more pronounced in the case of moderately busy directors than in that of directors with fewer directorships and time-poor over-boarded directors. This helps directors achieve profitability targets while maintaining their reputations and indicates their optimism about the loans’ future. Our results are robust in terms of accounting for endogeneity concerns, which are addressed using a two-stage least squares regression and entropy-balancing methodology as well as some alternative definitions of ‘multiple directorships’ used in the literature.
AB - This paper examines whether directors with multiple directorships affect extent of banks' loan loss provisions in South Asia. Our results indicate that directors with multiple directorships tend to delay the recognition of loan loss provisions. Specifically, we find the existence of a U-shaped relationship between directors with multiple directorships and loan loss provisions, indicating that the delay is more pronounced in the case of moderately busy directors than in that of directors with fewer directorships and time-poor over-boarded directors. This helps directors achieve profitability targets while maintaining their reputations and indicates their optimism about the loans’ future. Our results are robust in terms of accounting for endogeneity concerns, which are addressed using a two-stage least squares regression and entropy-balancing methodology as well as some alternative definitions of ‘multiple directorships’ used in the literature.
KW - Multiple directorships
KW - Loan loss provisions
KW - Banks in South Asia
KW - Multiple directFinancial reporting of banks
UR - http://www.scopus.com/inward/record.url?scp=85111047675&partnerID=8YFLogxK
U2 - 10.1016/j.jcae.2021.100277
DO - 10.1016/j.jcae.2021.100277
M3 - Article
AN - SCOPUS:85111047675
SN - 1815-5669
VL - 17
SP - 1
JO - Journal of Contemporary Accounting and Economics
JF - Journal of Contemporary Accounting and Economics
IS - 3
M1 - 100277
ER -