Seminar (Dept. of Accounting)

Theme：Reporting Rules in Bank Runs

Speaker：Ronghuo Zheng, Assistant Professor, University of Texas at Austin

Time：2021-05-13 09:16

Address：Zoom会议室

Language：Chinese/English

Venue：Zoom Meeting

https://zoom.com.cn/j/65763014271?pwd=MFc5K1VUNi9ZeWxxUWt5VURHOFkvUT09 

Meeting ID：657 6301 4271

Password：664690

ABSTRACT:

We study the role of reporting rules in the context of bank runs. In our model, a financial institution receives an early but imprecise estimate of the performance of its investment and issues a report subject to a reporting rule. We find that, from a financial-stability standpoint, the optimal reporting rule requires full disclosure when the financial institution's early estimate is sufficiently unfavorable, but no disclosure otherwise. Importantly, the threshold below which the financial institution reports should be tailored to the financial institution's exposure to bank-run risk. In particular, the optimal reporting threshold is non-monotonic and U-shaped in the bank-run risk. We also relate our results to current accounting standards for asset impairments.

SHORT BIOGRAPHY:

Dr. Ronghuo Zheng is an Assistant Professor of Accounting at the McCombs School of Business at the University of Texas at Austin. He obtained his PhD from the Tepper School of Business at Carnegie Mellon University. His research interests are in the broader area of financial and managerial accounting with a focus on the role of information in decision making. His research has been published in the Journal of Accounting and Economics, the RAND Journal of Economics, Management Science, and INFORMS Journal on Computing.