Financial Reporting Quality of U.S. Private and Public Firms

By Ole‐Kristian Hope, Wayne B. Thomas, Dushyantkumar Vyas. 2013

358 citations recorded by the source corpus.

ABSTRACT: Using a new database that contains accounting data for a large sample of U.S. private firms, we provide an investigation of financial reporting quality (FRQ) of U.S. private versus public firms. We find that in general public firms have higher accrual quality and are more conservative. The results are consistent with public firms' reporting reflecting greater demand for financial information. However, these reporting qualities of public firms are mitigated or eliminated in settings where public firms are more likely to manage earnings or face reduced demand for their financial information. Our study contributes not only to the current debate on private versus public financial accounting, but also to the broader literature attempting to understand the determinants of FRQ.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/8ea3d47d4cf59189a15364ed747770775061ab1c

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Citations in the corpus

Information Environment and the Investment Decisions of Multinational Corporations (2013, methodology): “Following prior literature, we use the magnitude of accruals relative to the magnitude of cash flows as a proxy for earnings management (Leuz et al. 2003; Barth et al. 2008; Hope et al. 2013).”
Effect of Financial Reporting Quality on Sustainability Information Disclosure (2015, background): “These arguments are along the same line as the opportunistic hypothesis, according to which managers may act in their own interests and the quality of financial reporting could be affected by these unethical actions (Hope et al., 2012).”
Bank earnings and regulatory capital management using available for sale securities (2017, neutral): “Coppens and Peek (2005), Graham et al. (2005), Burgstahler et al. (2006), and Hope et al. (2013) reveal that non-listed firms also perceive earnings management as important.”