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The role of accounting and governance for lending decisions
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Li, Jiayin. The role of accounting and governance for lending decisions. Retrieved from https://doi.org/doi:10.7282/t3-38rt-as95

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TitleThe role of accounting and governance for lending decisions
NameLi, Jiayin (author); Dimitrov, Valentin (chair); Anantharaman, Divya (member); Govindaraj, Suresh (member); Chidambaran, N. K. (member); Rutgers University; Graduate School - Newark
Date Created2021
Other Date2021-10 (degree)
SubjectAccounting, Corporate governance, Accounting, Discrimination in mortgage loans, Discrimination in banking, Bank loans, Loan officers, Discrimination, Earnings quality, Lending, Product market competition
Extent1 online resource (viii, 140 pages) : illustrations
DescriptionThis dissertation contains three chapters. The first chapter is an empirical study investigating the impact of accounting quality on the outcome of product market competition through the business cycles. The second chapter examines whether minority board members in banks will give minority borrowers more access to mortgage loans. The last chapter is a theoretical literature review providing a comprehensive theoretical background for the previous two empirical studies.

The first empirical study investigates the impact of accounting quality on the outcome of product market competition through the business cycles. The results show that firms with lower earnings quality have worse industry-adjusted sales growth than peers following the onset of recessions. This relationship is stronger for firms that depend more on external financing, those in more competitive industries, and those that produce nondurable goods. In addition, borrowing during recessions declines more for firms with lower earnings than rivals with higher earnings quality. Overall, these results indicate that poor earnings quality is associated with more significant credit constraints during recessions, which leads to reductions in these firms’ rate of industry-adjusted sales growth.

The second paper examines whether bank boards with minority directors have different rejection rates for minority borrowers who apply for home mortgages. By using IV and matching methods, this study finds that banks with at least one African American director have lower rejection rates for African American mortgage loan applications by 8.2%. Results also show that having African American board members benefits African American borrowers and benefits loan applications across all ethnic groups. No such effects are found for Hispanic or Asian directors. Furthermore, this study finds no effects on bank risk or performance. This result makes it unlikely that differences in credit risk alone can explain the higher rejection rates for minority borrowers.

The last chapter is a review of theoretical studies that relate to the previous two empirical papers. These theories include the predatory pricing theory, how accounting quality affects credit markets, how diversified board composition affects firms’ decisions and the theory of discrimination.
NotePh.D.
NoteIncludes bibliographical references
Genretheses
Persistent URLhttps://doi.org/doi:10.7282/t3-38rt-as95
LanguageEnglish
CollectionGraduate School - Newark Electronic Theses and Dissertations
Organization NameRutgers, The State University of New Jersey
RightsThe author owns the copyright to this work.
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