Guest Lecturer Prof Hwan Speaks on Bank Lending and Accounting Recognition

Date:

142015/12

With the start of the new academic module, seminars and workshops for the knowledge enhancement of students and faculty alike have also started to take place at PHBS once again. Seminars are a great way to not only enhance knowledge about other universities and professors’ research but it also gives a glimpse into latest research techniques and their application.

On November 16^th PHBS hosted a seminar in which Professor Bong Hwan, Associate Professor from Seoul National University, presented his latest research work. He received his Ph.D in business administration (accounting) from Washington University. His research interests include public accounting, debt contract, and bank monitoring. In his latest research that he presented at PHBS he talked about the changes in borrower accounting recognition surrounding the initiations of receivable-based bank loans with covenants requiring accounts receivable aging reports. The main purpose was to understand how scrutiny by lenders of underlying transactions affects financial reporting incentives and to identify a mechanism through which lenders gather information and monitor borrowers. He found that allowance for doubtful accounts increases significantly after loan initiation for test firms that borrow bank loans with receivable aging reports requirement compared to propensity-score matched firms that also borrow bank loans without receivable aging reports requirement. He also found that the increase in allowance is more pronounced for single-lead lender loans and loans that lenders request more frequent aging reports. The results confirmed that lenders’ access to receivable aging information affects borrowers’ accounting choices.

The session concluded with questions from both students and faculty of PHBS. Professor Hwan thanked the PHBS management for inviting him to present his work.

Reported by Fayeza Yahya

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Guest Lecturer Prof Hwan Speaks on Bank Lending and Accounting Recognition

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