The Benefits of Financial Statement Comparability
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Verdi_The benefits.pdf
Size
301.61 KB
Format
Adobe PDF
Checksum (MD5)
0d985b2c4a8cd040ef621834295d3c95
Author(s)
de Franco, Gus
Kothari, S. P.
Verdi, Rodrigo
Date Issued
April 2011
Journal
Journal of Accounting Research
Publisher
John Wiley & Sons
Citation
DE FRANCO, G., KOTHARI, S. and VERDI, R. S. (2011), The Benefits of Financial Statement Comparability. Journal of Accounting Research, 49: 895–931.
Version
Author's final manuscript
Abstract
Investors, regulators, academics, and researchers all emphasize the importance of financial statement comparability. However, an empirical construct of comparability is typically not specified. In addition, little evidence exists on the benefits of comparability to users. This study attempts to fill these gaps by developing a measure of financial statement comparability. Empirically, this measure is positively related to analyst following and forecast accuracy, and negatively related to analysts’ dispersion in earnings forecasts. These results suggest that financial statement comparability lowers the cost of acquiring information, and increases the overall quantity and quality of information available to analysts about the firm.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike 3.0
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DOI of Published Version
https://doi.org/10.1111/j.1475-679X.2011.00415.x
