Loan loss provisions in large publicly quoted European banks and auditor independence

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dc.contributor.authorCampa, Domenico
dc.contributor.authorDonnelly, Ray
dc.contributor.funderInstitute of Certified Public Accountants in Irelanden
dc.date.accessioned2019-08-14T11:02:57Z
dc.date.available2019-08-14T11:02:57Z
dc.date.issued2019-07-18
dc.date.updated2019-08-14T10:48:45Z
dc.description.abstractThe European Commission, citing deficiencies in the financial statements of banks during the financial crisis, has questioned the independence of the auditors of European banks at the onset of the crisis. We test for evidence of impaired auditor independence by examining if the economic bond between auditors and clients is associated with the audit quality of banks, controlling for the strength of banking regulation of the country in which a bank operates. We find no evidence of income‐increasing loan loss provisions being positively associated with the auditor–client economic bond. There is no indication that auditor independence is impaired in EU banks. Stronger country regulation is associated with more conservative provisioning before and after the formation of the European Banking Authority. We also find that the strength of banking regulation mitigates any tendency of auditors' independence to be compromised by the auditor–client economic bond.en
dc.description.statusPeer revieweden
dc.description.versionAccepted Versionen
dc.format.mimetypeapplication/pdfen
dc.identifier.citationCampa, D. and Donnelly, R. (2019) 'Loan loss provisions in large publicly quoted European banks and auditor independence', International Journal of Auditing, 23(2), pp. 245-262. doi: 10.1111/ijau.12158en
dc.identifier.doi10.1111/ijau.12158en
dc.identifier.eissn1099-1123
dc.identifier.endpage262en
dc.identifier.issn1090-6738
dc.identifier.issued2en
dc.identifier.journaltitleInternational Journal of Auditingen
dc.identifier.startpage245en
dc.identifier.urihttps://hdl.handle.net/10468/8318
dc.identifier.volume23en
dc.language.isoenen
dc.publisherJohn Wiley & Sons, Inc.en
dc.relation.urihttps://onlinelibrary.wiley.com/doi/abs/10.1111/ijau.12158
dc.rights© 2019, John Wiley & Sons Ltd. This is the peer reviewed version of the following article: Campa, D. and Donnelly, R. (2019) 'Loan loss provisions in large publicly quoted European banks and auditor independence', International Journal of Auditing, 23(2), pp. 245-262. doi: 10.1111/ijau.12158, which has been published in final form at https://doi.org/10.1111/ijau.12158. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.en
dc.subjectAuditor independenceen
dc.subjectBanking regulationen
dc.subjectEuropean banksen
dc.subjectLoan loss provisionsen
dc.titleLoan loss provisions in large publicly quoted European banks and auditor independenceen
dc.typeArticle (peer-reviewed)en
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