Government Procurement and Changes in Firm Transparency
Name
SSRN-id3197640.pdf
Description
Submitted version
Size
916.23 KB
Format
Adobe PDF
Checksum (MD5)
7e699900531ed0dd3ab4d09f9a2f8f41
Author(s)
Samuels, Delphine
Date Issued
February 2020
Journal
Accounting Review
Publisher
American Accounting Association
Citation
Samuels, Delphine. "Government Procurement and Changes in Firm Transparency." Accounting Review 96, 1 (February 2020): 401–430. © 2021 American Accounting Association
Version
Author's final manuscript
Abstract
The government requires its suppliers to have certain internal information processes to reduce uncertainty about their ability to fulfill their commitments. I argue that these requirements improve suppliers’ internal information, which leads to better external reporting. Using a dataset of U.S. government contracts, I find a positive relation between government contract awards and firms’ external reporting quality. Consistent with procurement-related requirements driving this relation, I find that firms improve their external reporting when they begin contracting with the government, and that the magnitude of the improvement varies predictably with contract characteristics imposing greater requirements on contractors’ internal information processes. Finally, I use the establishment of the Cost Accounting Standards Board in 1970 as a shock to contractors’ internal information requirements, and find greater improvements in external reporting among firms subject to the CASB. Overall, these results suggest that the government as a customer contributes to shaping firms’ information environments.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.2308/tar-2018-0343
