Discussion of “Financial Statement Comparability and the Efficiency of Acquisition Decisions”

Klein, April

doi:10.1111/1911-3846.12379

Cited by 17 publications

(9 citation statements)

References 20 publications

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“…Comparability needs the intellectual capacity of the human asset which helps in evaluation of companies' acquisitions and merger and provides basis for future performance measurements (Ciao-Wei, Collins, Kravet & Mergenthaer, 2018). Klein (2018) considered financial statement comparability as intellectual capacity of the human capital that allows quality decision making to be taken by stakeholders. This indicates that before the informed decision is made, the intellectual influence of the human capital plays a pivotal role in achieving quality financial statement.…”

Section: Empirical Reviewmentioning

confidence: 99%

“…This indicates that the users rely heavily on this quality of the financial report in analyzing the performance of the company before investing decisions. Comparability shows the higher level of reliance and acceptability by the users of financial statements (ELiu, Fang-Chun & Xiadi, 2018) Financial statement comparability done by the human asset plays an informative role in company's business investments' decision by helping to analyse the financial performance and position of the business and compare with returns whether such investments are more profitable or not (Klein 2018). Comparability of financial information helps to improve the quality of financial information in decision making and in information provision by financial forecasts.…”

Section: Empirical Reviewmentioning

confidence: 99%

“…This implies that the financial position and performance is a product of accounting information for different periods which helps to carry out the comparison based on the financial resources allocations for those periods (Ciao-Wei, Collins, Kravet & Mergenthaler, 2018) Financial statements comparability plays an informative role in assessing the company's position and performance which helps to indicate whether the business is more profitable in the market or not (Allen & Ramanna, 2013). This demonstrates that the higher is financial statements' comparability, the more effective are the decisions of the stakeholders (Klein, 2018). Therefore, the study examined human capital diversity and comparability of accounting information of quoted manufacturing companies in Nigeria.…”

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confidence: 99%

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Human Capital Diversity and Comparability of Accounting Information of Quoted Manufacturing Companies in Nigeria

Odunayo¹,

Ganiyu²,

A³

2022

theijbm

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Human Capital Diversity and Comparability of Accounting Information of Quoted Manufacturing Companies in Nigeria 1. IntroductionComparability is the level of standardization of accounting information that allows the financial statements of multiple organizations to be compared with each other and this is a fundamental requirement of financial reporting that is needed by the users of financial statements. Comparability facilitates benchmarking across firms which ensures that investors can access more relevant peer and overall industry information. It also lowers investors' firm specific information processing costs and thereby facilitates a more precise valuation of financial information.Financial statements should always be compared to assist stakeholders in determining the performance of the organisation. The statement should possess the qualitative characteristics of accounting information which will help the stakeholders make necessary decisions based on the performance through comparison at every point in time (Farouk, Magaji & Eega, 2019). Comparability improves usefulness of financial statements because it allows users to carry out trend analysis, cross sectional analysis and common size analysis. Trend analysis helps to see whether a company's position and or performance has or have improved across time (Soyemi & Olawale, 2019). This means that information must be comparable to the financial information presented for other accounting periods, so that users can identify trends in the performance and financial position of the reporting entity.In Nigeria, firm's financial reporting issues and different degrees of scandals were prominent in different sectors of the economy. In the year 2012, it was reported that 45 banks were involved in unethical practices which led to their liquidation between 1994(Egbo, 2012. Among the companies affected are Savannah Bank, Cadbury Nigeria Plc and Lever Brothers. In Nigeria, the corruption in Cadbury led to loss of confidence of the public and investors which affected the reputation of the company. As a result, the reputation of the company was severely damaged to the extent that most investors withdrew their investments. Also, in 2002, the license of Savannah bank was withdrawn due to fraudulent activities, mismanagement, corruption and other unethical practices by the bank officials' poor, liquidity and unavailability of adequate credits to deserving customers.

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Section: Empirical Reviewmentioning

confidence: 99%

Section: Empirical Reviewmentioning

confidence: 99%

mentioning

confidence: 99%

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Human Capital Diversity and Comparability of Accounting Information of Quoted Manufacturing Companies in Nigeria

Odunayo¹,

Ganiyu²,

A³

2022

theijbm

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“…Meanwhile, other opinions about the measure emerged. For example, one argument is that the measure of comparability is a conceptual proxy and could be affected by more than one factor -earnings (Klein, 2018).…”

Section: Studies On Financial Statements Comparabilitymentioning

confidence: 99%

Does Financial Statement Comparability Enhance The Usefulness of Earnings? Evidence From Canada

Jiang¹

2022

Preprint

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<p>Building on the comparability construct developed by De Franco, Kothari, and Verdi (2011), the study examines whether the comparability enhances the usefulness – relevance and reliability – of earnings, as suggested in the International Financial Reporting Standards (IFRS) Conceptual Framework. By far, researchers have examined the benefit of comparability from the users’ perspective. However, the relationships between comparability and earnings relevance or earnings reliability have not been directly examined. This paper is motivated to address such a question using Canadian firms’ data in the post-IFRS period to estimate firm-specific comparability, and then to test the roles of comparability in earnings relevance and earnings reliability. The results document that comparability has a significantly positive impact on both relevance and reliability of earnings. Additionally, the study conducts comparability analysis with size and industry effect. Overall, the results are consistent with the prediction, indicating that comparability enhances the decision-usefulness of earnings.</p><div><br></div>

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“…2 2 Additional documented effects include more accurate analyst forecasts (De Franco et al 2011), improved informativeness of stock prices (Choi et al 2019), better peer‐based valuation performance (Young and Zeng 2015), and decreased expected crash risk (J. K. Kim et al 2016). Research also identifies comparability effects beyond capital market outcomes: for example, improved efficiency of acquisition decisions (Chen et al 2018; Klein 2018) and greater innovative efficiency (Chircop et al 2020). …”

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confidence: 99%

Has Global Financial Reporting Comparability Improved?*

Conaway

2022

Contemporary Accting Res

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Motivated by ongoing worldwide efforts to improve the comparability of accounting information, I examine the temporal trend in global financial reporting comparability. Regulators have made serious efforts to improve comparability, but numerous frictions may have limited their effectiveness. Accordingly, I examine the time-series properties of comparability measures for a sample of the 36 largest economies and provide two key empirical insights consistent with expectations. First, I confirm comparability is increasing over 2002-2018. Second, I document that this increase primarily occurs in firms applying local accounting standards, as opposed to those applying global standards (defined as either US GAAP or IFRS). Additional analyses reveal that: (i) firms applying local standards are becoming more comparable to firms applying IFRS but not to those applying US GAAP, and (ii) comparability within global-standards firms is not changing. I also document that certain market liquidity benefits of comparability are sustained in the long term, as firms increasing comparability over the sample period experience greater reductions in bid-ask spread and zero-return trading days relative to those decreasing comparability. Overall, the results reveal that comparability has increased-consistent with systematic regulatory efforts-but that this increase arises heterogeneously across firms, with the primary effects in recent years occurring among those applying local standards.

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Discussion of “Financial Statement Comparability and the Efficiency of Acquisition Decisions”

Cited by 17 publications

References 20 publications

Human Capital Diversity and Comparability of Accounting Information of Quoted Manufacturing Companies in Nigeria

Human Capital Diversity and Comparability of Accounting Information of Quoted Manufacturing Companies in Nigeria

Does Financial Statement Comparability Enhance The Usefulness of Earnings? Evidence From Canada

Has Global Financial Reporting Comparability Improved?*

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