Discretionary behavior with respect to allowances for loan losses and the behavior of security prices

Article Abstract:

The computation of allowances for loan losses is done by the banking sector in a two-stage approach, wherein the allowance is broken down into its nondiscretionary and discretionary components and each given its estimates of market valuation. The differences in the way with which the capital market place value on both components is incremental on the discretionary component and a constant negative coefficient for the non-discretionary component.

Banking Institutions, Depository Credit Intermediation, DEPOSITORY INSTITUTIONS, Models, Banking industry, Management, Banks (Finance), Loan loss reserves

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The pricing of discretionary accruals

Article Abstract:

The accounting method employed by a firm to report company performance and earnings could significantly affect the performance of the company's stocks and accrual accounting is the method to employ to communicate better company performance. While discretionary accruals are priced by the market, the discretion of the management in employing accounting methods that improve company performance could further boost stock performance.

Accounting Methods, Psychological aspects, Analysis, Accounting, Investments, Valuation, Accrual basis accounting

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Discretionary Disclosure

Article Abstract:

The discretionary actions of a manager in disclosing information is evaluated. When controlling risky assets, a manager must consider disclosure related costs. The information effect on the market must be considered, as should a wide range of possible interpretations.

Accounting and auditing, Disclosure statements (Accounting)

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