CPA Research Speaker Series (ACCTG) - Gaetano (Gus) De Franco, Tulane University

Friday, September 20, 2019

2:00 PM - 3:30 PM

TOPIC: Do Firms Mimic Their Neighbors’ Accounting? Industry Peer Headquarters Co-Location and Financial Statement Comparability



Motivated by institutional theory, we investigate and find results consistent with firms imitating the accounting of peers headquartered in the same location. Using a large sample of observations from 1993 to 2017, we find both statistically and economically significant evidence that firms have higher financial statement comparability with industry peers located in the same MSA than with industry peers not located in the same MSA. The effect is robust to using a difference-in-differences test based on a sample of firms that relocated their headquarters. Furthermore, we explore several cross-sectional analyses based on institutional theory. We find that financial statement comparability between an industry leader and an industry follower is greater than between two followers or between two industry leaders. Importantly, the higher comparability between followers and leaders exists regardless of whether the leaders have high or low accounting quality. In addition, the effect of headquarters co-location on comparability is more pronounced between firms with stronger networks and those operating in industries with greater uncertainty. Overall, our study contributes to a better understanding of the determinants of financial statement comparability.  


BUS 4-04 (CA Conference Room), Alberta School of Business


Name: Karmeni Govender