Real earnings management through syndicated lending

I examine whether banks manage syndicated loan originations to achieve financial reporting goals. Using a large sample of loans and relying on within-quarter analysis, find that publicly traded narrowly beat earnings benchmarks initiate more in the last month fiscal quarter book origination fees. Relative otherwise similar loans, these are associated with front-end fees 4.2% higher but have credit spreads 3.3% lower, resulting net price discount 2.5%. The findings stronger for bigger banks, lenders funding-constrained, whose managers’ pay is sensitive stock performance. Further, underperform terms future defaults rating downgrades. Finally, while hypothesized management helps raise capital short term, it costly longer as lower profitability ratios. Overall, provide model-free evidence banks’ real costs this behavior.