{"id":1322,"date":"2020-11-22T11:40:45","date_gmt":"2020-11-22T10:40:45","guid":{"rendered":"https:\/\/eaa-online.org\/arc\/blog\/blog\/organizational-memory-and-bank-accounting-conservatism-ear\/"},"modified":"2020-11-22T11:40:45","modified_gmt":"2020-11-22T10:40:45","slug":"organizational-memory-and-bank-accounting-conservatism-ear","status":"publish","type":"post","link":"https:\/\/eaa-online.org\/arc\/blog\/2020\/11\/22\/organizational-memory-and-bank-accounting-conservatism-ear\/","title":{"rendered":"Organizational Memory and Bank Accounting Conservatism &#8211; EAR"},"content":{"rendered":"<p class=\"xdefault\" style=\"text-align:justify;text-indent:36.0pt\"><span style=\"font-family:&quot;Times New Roman&quot;,serif;color:black\">This paper is the first to examine the impact of organizational memory of banks on the conservatism of accounting policy. Specifically, we examine the organizational memory of banks regarding bad times history. <\/span><span style=\"font-family:&quot;Times New Roman&quot;,serif\">We separately address two related questions: 1) In the face of bank-level or macro-level crises, how can bank managers and\/or the board of directors take action to change bank accounting policy? 2) Is the change of accounting policy driven by managers and board monitoring (either or both), or auditors? We show both theoretically and empirically that the bad time memory of the managers and board of directors, rather than that of the external auditors, is mainly responsible for heightened accounting conservatism. &nbsp;<\/span><span style=\"font-size:12.0pt;color:black\"><o:p><\/o:p><\/span><\/p>\n<p class=\"xmsonormal\" style=\"margin-bottom:10.0pt;text-align:justify\"><span style=\"font-family:&quot;Times New Roman&quot;,serif;color:black\">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Our results show that bad times, either bank-specific or economy-wide, are associated with increased bank accounting conservatism. In other words, banks that have been undercapitalized and\/or witnessed other banks fail in an economic crisis recognize their own losses more timely and recognize proportionately larger loan loss allowances. These findings support the prediction that, relative to healthy banks, banks that have survived crises might overreact to their bad times and become more pessimistic about their future. &nbsp;<\/span><span style=\"color:black\"><o:p><\/o:p><\/span><\/p>\n<p class=\"xdefault\" style=\"text-align:justify;text-indent:36.0pt\"><span style=\"font-family:&quot;Times New Roman&quot;,serif;color:black\">In order to confirm our empirical results from path analysis that the bad time memories of managers and boards of directors rather than those of external auditors is mainly responsible for the heightened accounting conservatism, we conduct a survey among senior U.S. bank executives (i.e., CEO, CFO, president, and chairman) to obtain corroborative anecdotal evidence\/testimonies and identify which force plays the major role in impacting the relationship between memory of bad times and bank accounting conservatism. The responses from the survey participants generally confirm our findings that the bad time memories of managers and boards of directors are the most important forces heightening bank accounting conservatism. The survey responses also provide evidence that the bad time memories of auditors can heighten bank accounting conservatism but with less impact. &nbsp;<\/span><span style=\"font-size:12.0pt;color:black\"><o:p><\/o:p><\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This paper is the first to examine the impact of organizational memory of banks on the conservatism of accounting policy. Specifically, we examine the organizational memory of banks regarding bad times history. We separately address two related questions: 1) In the face of bank-level or macro-level crises, how can bank managers and\/or the board of [&hellip;]<\/p>\n","protected":false},"author":61,"featured_media":1323,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0},"categories":[1],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.12 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Organizational Memory and Bank Accounting Conservatism - EAR - ARC<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Organizational Memory and Bank Accounting Conservatism - EAR - ARC\" \/>\n<meta property=\"og:description\" content=\"This paper is the first to examine the impact of organizational memory of banks on the conservatism of accounting policy. Specifically, we examine the organizational memory of banks regarding bad times history. We separately address two related questions: 1) In the face of bank-level or macro-level crises, how can bank managers and\/or the board of [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/eaa-online.org\/arc\/blog\/2020\/11\/22\/organizational-memory-and-bank-accounting-conservatism-ear\/\" \/>\n<meta property=\"og:site_name\" content=\"ARC\" \/>\n<meta property=\"article:published_time\" content=\"2020-11-22T10:40:45+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/eaa-online.org\/app\/uploads\/sites\/3\/2020\/11\/ear_logo_4.png\" \/>\n\t<meta property=\"og:image:width\" content=\"640\" \/>\n\t<meta property=\"og:image:height\" content=\"366\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"ARC Commitee\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"ARC Commitee\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/eaa-online.org\/arc\/blog\/2020\/11\/22\/organizational-memory-and-bank-accounting-conservatism-ear\/\",\"url\":\"https:\/\/eaa-online.org\/arc\/blog\/2020\/11\/22\/organizational-memory-and-bank-accounting-conservatism-ear\/\",\"name\":\"Organizational Memory and Bank Accounting Conservatism - EAR - ARC\",\"isPartOf\":{\"@id\":\"https:\/\/eaa-online.org\/arc\/#website\"},\"datePublished\":\"2020-11-22T10:40:45+00:00\",\"dateModified\":\"2020-11-22T10:40:45+00:00\",\"author\":{\"@id\":\"https:\/\/eaa-online.org\/arc\/#\/schema\/person\/4eb052dd692b65a6b0d26b1f670a79aa\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/eaa-online.org\/arc\/blog\/2020\/11\/22\/organizational-memory-and-bank-accounting-conservatism-ear\/\"]}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/eaa-online.org\/arc\/#website\",\"url\":\"https:\/\/eaa-online.org\/arc\/\",\"name\":\"ARC\",\"description\":\"Advanced Resources Center\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/eaa-online.org\/arc\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/eaa-online.org\/arc\/#\/schema\/person\/4eb052dd692b65a6b0d26b1f670a79aa\",\"name\":\"ARC Commitee\",\"url\":\"https:\/\/eaa-online.org\/arc\/blog\/members\/61\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Organizational Memory and Bank Accounting Conservatism - EAR - ARC","robots":{"index":"noindex","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"og_locale":"en_US","og_type":"article","og_title":"Organizational Memory and Bank Accounting Conservatism - EAR - ARC","og_description":"This paper is the first to examine the impact of organizational memory of banks on the conservatism of accounting policy. Specifically, we examine the organizational memory of banks regarding bad times history. We separately address two related questions: 1) In the face of bank-level or macro-level crises, how can bank managers and\/or the board of [&hellip;]","og_url":"https:\/\/eaa-online.org\/arc\/blog\/2020\/11\/22\/organizational-memory-and-bank-accounting-conservatism-ear\/","og_site_name":"ARC","article_published_time":"2020-11-22T10:40:45+00:00","og_image":[{"width":640,"height":366,"url":"https:\/\/eaa-online.org\/app\/uploads\/sites\/3\/2020\/11\/ear_logo_4.png","type":"image\/png"}],"author":"ARC Commitee","twitter_card":"summary_large_image","twitter_misc":{"Written by":"ARC Commitee","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/eaa-online.org\/arc\/blog\/2020\/11\/22\/organizational-memory-and-bank-accounting-conservatism-ear\/","url":"https:\/\/eaa-online.org\/arc\/blog\/2020\/11\/22\/organizational-memory-and-bank-accounting-conservatism-ear\/","name":"Organizational Memory and Bank Accounting Conservatism - EAR - ARC","isPartOf":{"@id":"https:\/\/eaa-online.org\/arc\/#website"},"datePublished":"2020-11-22T10:40:45+00:00","dateModified":"2020-11-22T10:40:45+00:00","author":{"@id":"https:\/\/eaa-online.org\/arc\/#\/schema\/person\/4eb052dd692b65a6b0d26b1f670a79aa"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/eaa-online.org\/arc\/blog\/2020\/11\/22\/organizational-memory-and-bank-accounting-conservatism-ear\/"]}]},{"@type":"WebSite","@id":"https:\/\/eaa-online.org\/arc\/#website","url":"https:\/\/eaa-online.org\/arc\/","name":"ARC","description":"Advanced Resources Center","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/eaa-online.org\/arc\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/eaa-online.org\/arc\/#\/schema\/person\/4eb052dd692b65a6b0d26b1f670a79aa","name":"ARC Commitee","url":"https:\/\/eaa-online.org\/arc\/blog\/members\/61\/"}]}},"jetpack_featured_media_url":"https:\/\/eaa-online.org\/app\/uploads\/sites\/3\/2020\/11\/ear_logo_4.png","_links":{"self":[{"href":"https:\/\/eaa-online.org\/arc\/wp-json\/wp\/v2\/posts\/1322"}],"collection":[{"href":"https:\/\/eaa-online.org\/arc\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/eaa-online.org\/arc\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/eaa-online.org\/arc\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/eaa-online.org\/arc\/wp-json\/wp\/v2\/comments?post=1322"}],"version-history":[{"count":0,"href":"https:\/\/eaa-online.org\/arc\/wp-json\/wp\/v2\/posts\/1322\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/eaa-online.org\/arc\/wp-json\/wp\/v2\/media\/1323"}],"wp:attachment":[{"href":"https:\/\/eaa-online.org\/arc\/wp-json\/wp\/v2\/media?parent=1322"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/eaa-online.org\/arc\/wp-json\/wp\/v2\/categories?post=1322"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/eaa-online.org\/arc\/wp-json\/wp\/v2\/tags?post=1322"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}