The Earnings Quality and Information Processing Effects of Accounting Consistency

• 成果类型: Article
• 署名作者: Peterson, Kyle; Schmardebeck, Roy; Wilks, T. Jeffrey
• 署名单位: University of Oregon; University of Missouri System; University of Missouri Columbia; Brigham Young University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51048
• 发表日期: 2015
• 页码: 2483-2514
• 关键词: internal control; accruals; analysts; asymmetry; industry; MARKET

摘要

We specify measures of accounting consistency both across time and across firms based on the textual similarity of accounting policy footnotes disclosed in 10-K filings. We first examine how these measures relate to earnings quality. Accounting consistency over time is positively associated with a number of earnings quality proxies, including earnings persistence, predictability, accrual quality, and absolute discretionary accruals. We also find that lower consistency relative to other firms in the industry is associated with larger absolute accrual model residuals. Finally, we examine the information processing effects of accounting consistency. We find that greater accounting consistency in the time-series and the cross-section is associated with lower information asymmetry, as proxied by bid-ask spread and illiquidity. Greater cross-sectional consistency is also associated with greater analyst coverage, more accurate analyst forecasts, decreased dispersion in analyst forecasts, and stronger stock return synchronicity.