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Reaction of Bank Stock Prices to Loan-Loss Reserve Announcements

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  • Docking, Diane Scott
  • Hirschey, Mark
  • Jones, Elaine

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. Copyright 2000 by Kluwer Academic Publishers

Suggested Citation

  • Docking, Diane Scott & Hirschey, Mark & Jones, Elaine, 2000. "Reaction of Bank Stock Prices to Loan-Loss Reserve Announcements," Review of Quantitative Finance and Accounting, Springer, vol. 15(3), pages 277-297, November.
    • Handle: RePEc:kap:rqfnac:v:15:y:2000:i:3:p:277-97
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    Cited by:

    1. Yongtao Hong & Fariz Huseynov & Sabuhi Sardarli & Wei Zhang, 2020. "Bank earnings management and analyst coverage: evidence from loan loss provisions," Review of Quantitative Finance and Accounting, Springer, vol. 55(1), pages 29-54, July.
    2. Dung Viet Tran & M. Kabir Hassan & Reza Houston, 2020. "Discretionary loan loss provision behavior in the US banking industry," Review of Quantitative Finance and Accounting, Springer, vol. 55(2), pages 605-645, August.
    3. Maxim Zagonov & Bernd Hanke, 2020. "Investor Attention, Lottery Stocks and the Cross-Section of Expected Returns," Economics Bulletin, AccessEcon, vol. 40(1), pages 18-34.
    4. Nawazish Mirza & Amir Hasnaoui & Birjees Rahat, 2020. "Credit Quality and Stock Returns of Commercial Banks," Economics Bulletin, AccessEcon, vol. 40(1), pages 1-17.
    5. L. Smith & Baiqiang Jin, 2007. "Modeling exposure to losses on automobile leases," Review of Quantitative Finance and Accounting, Springer, vol. 29(3), pages 241-266, October.

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