Financial reporting uniformity: Its relation to comparability and its impact on financial statement users

Caylor, Marcus L.; Chambers, Dennis J.; Mutlu, Sunay

doi:10.1111/jbfa.12608

Cited by 7 publications

(3 citation statements)

References 62 publications

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“…Comparability is related to the concept of financial statement uniformity (Caylor et al., 2022). However, unlike uniformity, which measures the extent to which the financial reporting of a firm converges with that of the industry, comparability compares similarities in the reporting of individual firms (Caylor et al., 2022).…”

Section: Methodsmentioning

confidence: 99%

“…S. Chen et al (2015) construct two proxies of disclosure quality, one based on the balance sheet and the other based on the income statement and then generate the DQ measure as the average of the balance sheet and income statement measures. Recent research (Caylor et al, 2022) shows that DQ is positively correlated with the accounting comparability measure of De Franco et al (2011).…”

Section: Measuring Financial Statement Comparabilitymentioning

confidence: 99%

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Financial statement comparability and accounting fraud

Blanco

Dhole

Gul

2022

Business Fin & Account

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We examine the association between financial statement comparability and the likelihood of accounting fraud. Prior research documents a negative association between the quality of a firm's reporting environment and accounting fraud. We build on this literature and show that poor financial statement comparability is associated with a greater likelihood of accounting fraud. We also find that accounting comparability declines over time as the year of fraud detection approaches and that the association between comparability and fraud becomes more negative over this time. In addition, we find that financial statement comparability improves after fraud detection, consistent with the notion that managers improve their financial reporting quality after fraud.

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Section: Methodsmentioning

confidence: 99%

Section: Measuring Financial Statement Comparabilitymentioning

confidence: 99%

Financial statement comparability and accounting fraud

Blanco

Dhole

Gul

2022

Business Fin & Account

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“…The measure is called "financial statement comparability" in , "financial reporting similarity" in Johnston and Zhang (2021), "financial statement structural comparability" in Henry et al (2020), and "financial reporting uniformity" in Caylor et al (2022). In Caylor et al, a firm is compared with an industry prototype, which is defined as a hypothetical firm containing the financial statement items reported by most industry members.…”

Section: What Is Financial Reporting Comparability?mentioning

confidence: 99%

Financial statement similarity

Brown¹,

Tucker

2023

Contemporary Accting Res

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We propose financial statement similarity as a measure of financial reporting comparability. The firm‐pair version of our measure reflects the degree to which two firms report similar relations within their financial statement items; this version can help managers and market participants identify peer firms. The firm‐year version of our measure reflects the degree to which a firm reports financial statement relations that are similar to other members of its industry; this version can help market participants, regulators, and auditors screen firms for further attention. Our measure uses the presence and amounts of almost all financial items reported by a firm. We validate our measure in four sets of analyses to establish concurrent validity and in three sets of analyses to establish predictive validity. In all these tests, we contrast our measure with the comparability measure in De Franco et al. (2011) and a multivariate measure that considers the presence, but not amounts, of financial statement items. Our measure outperforms the alternatives and can be a useful tool for users.This article is protected by copyright. All rights reserved.

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Does Financial Statement Line-Item Comparability Affect Analysts’ Forecasts?

Henry

Liu

Yang

et al. 2023

Journal of Accounting, Auditing & Finance

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This study investigates comparability of firms’ financial statement presentation, that is, the display of line items on financial statements. The line items that are displayed on financial statements are the result of disclosure choices such as placement, formatting, and aggregation. Given the emergence of machine-readable data (for example, XBRL-tags used in this paper in creating our test variable), a question arises about the relevance of items’ presentation on the face of the human-readable financial statements. This paper examines the relation between line-item comparability (based on the face of financial statements) and financial statement users’ judgments as proxied by attributes of analysts’ forecasts. We posit that greater line-item comparability likely lowers analysts’ processing costs and enhances analysts’ ability to evaluate firms’ economic performance. Our results indicate that greater line-item comparability is associated with more analyst coverage, increased forecast accuracy, reduced forecast dispersion, and greater timeliness of forecasts. Overall, these results suggest that comparability of line items on the face of financial statement enhances informativeness.

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Financial reporting uniformity: Its relation to comparability and its impact on financial statement users

Cited by 7 publications

References 62 publications

Financial statement comparability and accounting fraud

Financial statement comparability and accounting fraud

Financial statement similarity

Does Financial Statement Line-Item Comparability Affect Analysts’ Forecasts?

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