The influence of banks on companies' accounting choices -A study of K2 and K3
Objective: The objective of this paper is to develop a shared understanding of what affects different banks’ lending process, how banks set to similar companies’ choice of different accounting rules and their incentives to affect companies. Method: In order to answer the research question data has been collected through interviews and literature consisting mainly of articles. The respondents were cred-‐ it analysts and business advisors and thus possessed the competence to answer the questions. The research question is of descriptive character and aims to de-‐ scribe banks’ behavior and how they want to steer companies’ accounting choices. Conclusion: Our results show that banks are not working to steer companies’ ac-‐ counting choices, the most crucial is that they understand and trust the figures the companies provide through their financial statements. In the credit assessment of small and medium-‐sized companies the banks investigate the cash flow, the man-‐ agement and they collect much qualitative information, not provided only from the financial statements but also from meetings and the relation with the customers. The banks have not taken a position regarding the K-‐regulations and how they want small and medium-‐sized companies to report. As long as the information is enough to make an assessment according to their risk approach, they are indiffer-‐ ent and will not steer companies in any direction. Further research: Since K2 and K3 have not become mandatory yet; the knowledge about the K-‐regulations is not great. Therefore it would be interesting to study if the same conclusion is reached after the K-‐regulations are implemented in the companies. Do banks want to control companies to a specific accounting choice after the regulations have been implemented and the banks have seen how the new regulatory has affected them and what approach they then will have.