Trust and Financial Reporting Quality

• 成果类型: Article
• 署名作者: Garrett, Jace; Hoitash, Rani; Prawitt, Douglas F.
• 署名单位: Bentley University; Brigham Young University
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12063
• 发表日期: 2014
• 页码: 1087-1125
• 关键词: internal control deficiencies; accrual estimation errors; earnings management; Managerial ability; equity incentives; ceo reputation; performance; COMPENSATION; RESTATEMENTS; weaknesses

摘要

Using unique survey data from Great Place to Work (R) Institute, we investigate the association of intraorganizational trust (i.e., employees' trust in management) with three aspects of financial reporting: accruals quality, misstatements, and internal control quality. We find that trust is associated with better accrual quality, lower likelihood of financial statement misstatements, and lower likelihood of internal control material weakness disclosures. However, these effects are not uniform across all companies. Consistent with trust improving financial reporting quality through improved information production and information sharing, we find that trust is significantly associated with financial reporting quality in relatively decentralized firms, but not in firms that are relatively centralized. Our results are robust to several analyses that attempt to control for potential alternative explanations.