INFORMATION AND CONTAGION EFFECTS OF BANK LOAN-LOSS RESERVE ANNOUNCEMENTS

Consistent with an information-signaling perspective, negative and sta tistically significant announcement effects are associated with bank l oan-loss reserve (LLR) announcements over the 1985-90 period. Announce ment effects differ between money-center and regional banks and also a ccording to the nature of contemporaneous earnings and dividend disclo sures, Moreover, information transfer or 'contagion' effects are prese nt in that LLR announcements by regional banks decrease the value of b oth money-center banks and nonannouncing regional banks. These statist ically significant contagion effects suggest a link between the asset quality characteristics of money-center and regional bank loan portfol ios.