Abstract
Performing univariate and multivariate analysis on the population of listed banks in Italy, this paper tests the following hypotheses: 1) whether Earnings (EM) and capital (MCAP) management are performed via Loan Loss Provision - LLP (2002-2011 period); 2) whether the association of LLP with earnings and capital management is significantly changed under IFRS for listed banks in Italy (2005-2007 period); 3) whether crisis changes the association of LLP and earnings – capital management (2008-2011 period). Coherently with previous literature, in Italian listed bank in the period 2002 – 2011 managers employ LLP for opportunistic behavior. IFRS reduce and financial crisis increase this behavior, in line with US and EU results. This is one of the first paper that analyze EM in banking industry in Italy, a country with an economic system focused overall on financial resources provided by banks and other financial institutions.