Organizational structure and earnings quality of private and public firms

• 成果类型: Article
• 署名作者: Bonacchi, Massimiliano; Marra, Antonio; Zarowin, Paul
• 署名单位: Free University of Bozen-Bolzano; Bocconi University; New York University
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-019-09495-y
• 发表日期: 2019
• 页码: 1066-1113
• 关键词: reporting incentives; market valuation; european private; life-cycle; management; OWNERSHIP; STANDARDS; companies; accruals; demands

摘要

We examine how heterogeneity in organizational structure affects private firm earnings quality in the European Union. Organizational structure refers to whether the firm is organized as a single legal entity (standalone) or as a business group. Private firms can be organized either way, while public firms are de facto groups. Even though private firms are not affected by market forces, we show that private business groups face greater stakeholder pressure for earnings quality than do standalone firms, while standalone firms have stronger tax minimization incentives. Due to these differences in nonmarket forces, private business groups have higher earnings quality than standalone firms. This heterogeneity among private firms is an important unexplored factor in the study of private firms, affecting the comparison between public and private firm earnings quality. We find that overall, public firms have higher earnings quality than private firms but this relation reverses when we control for nonmarket forces by examining business groups only.