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The supply of and demand for accounting information: the case of bank financing in Russia

Research output: Contribution to Journal/MagazineJournal articlepeer-review

<mark>Journal publication date</mark>04/2007
<mark>Journal</mark>Economics of Transition
Issue number2
Number of pages27
Pages (from-to)257-283
Publication StatusPublished
<mark>Original language</mark>English


The article analyzes the use of accounting information in Russia. We assess reporting behaviour in the lending process for a sample of Russian companies in the years 1999-2004 and postulate that Russian companies manage their earnings in order to avoid showing losses when applying for bank financing. Once a credit has been granted, companies are predicted to manage earnings because of the bank's monitoring activities. By means of univariate and multivariate analysis we are able to attribute the discontinuity around a zero target in the earnings distribution with firms' response to the banks' assessment of accounting performance. This implies that financing considerations affect the reporting incentives of Russian companies.