Data Analysis on Regional Competition and Earnings Quality of City Commercial Banks

Abstract

Compared with dividend distribution and cash flow, earnings information can effectively provide relevant stakeholders with accounting information and abundant earnings information. Based on the existing research, this thesis theoretically studies the impact of market competition on earnings quality. Meanwhile, we adopt the panel data of China’s prefecture-level cities during 2008–2018, the influence of regional competition level on the earnings quality of commercial banks can be tested by establishing Logit econometric model. We find several consistent evidences: the higher the regional industrial concentration of commercial banks, the lower the bank’s quality of earnings information. These findings are consistent with the intuition that firms in concentrated industries tend to protect their competitive advantages and avoid public and political attention by choosing a low-quality disclosure policy. The research is based on data analysis, which has further enriched the literature on the factors affecting the commercial bank’s earnings quality and the economic consequences of bank competition, and has also deepened the stakeholders’ understanding of the commercial banks’ earnings quality to a certain extent.