Enforcing mandatory reporting on private firmsthe role of banks

  1. Miguel Duro 1
  2. Germán López-Espinosa 2
  3. Sergio Mayordomo 3
  4. Gaizka Ormazabal 1
  5. María Rodríguez-Moreno 3
  1. 1 IESE BUSINESS SCHOOL
  2. 2 SCHOOL OF ECONOMICS - UNIVERSIDAD DE NAVARRA
  3. 3 Banco de España
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    Banco de España

    Madrid, España

    ROR https://ror.org/02f26yq04

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Revista:
Documentos de trabajo - Banco de España

ISSN: 0213-2710

Ano de publicación: 2022

Número: 38

Tipo: Documento de traballo

DOI: 10.53479/23526 DIALNET GOOGLE SCHOLAR lock_openAcceso aberto editor

Outras publicacións en: Documentos de trabajo - Banco de España

Resumo

This paper studies firm-level factors shaping the enforcement of financial reporting regulation on private non-financial firms and propose bank lending as a particularly important one. Our tests are based on a rare combination of datasets, which allows us to construct unique measures of misreporting, notably underreporting of debt. We observe that firms with bank debt are more likely to file mandatory financial reports and less likely to file information with irregularities. While we also find evidence that the need for bank financing can induce firms to misreport, this concern is mitigated by additional tests suggesting that banks detect reporting issues at firms’ financial statements. Critically, we observe that firms with reporting issues obtain significantly less credit, especially when the bank has previous exposure to debt misreporting and when the bank verifies debt information using the public credit registry. Collectively, our paper documents important firm-level determinants of private non-financial firms’ misreporting and highlight that banks play a significant role in the enforcement of mandatory financial reporting on these firms

Fonte de datos: Dialnet