Is Warren Buffett's Commentary on Accounting, Governance, and Investing Practices Reflected in the Investment Decisions and Subsequent Influence of Berkshire Hathaway?

• 成果类型: Article
• 署名作者: Bowen, Robert M.; Rajgopal, Shivaram; Venkatachalam, Mohan
• 署名单位: University of Washington; University of Washington Seattle; University of San Diego; Emory University; Duke University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-50797
• 发表日期: 2014
• 页码: 1609-1644
• 关键词: accrual estimation errors; stock returns; earnings; COMPENSATION; QUALITY; liquidity; COSTS

摘要

We examine (1) whether the accounting, governance, and investing practices of Berkshire Hathaway investees are consistent with Warren Buffett's public statements on what constitutes good accounting, governance, and investing practices and (2) whether these practices are associated with Berkshire's initial selection or Buffett's subsequent influence. Compared to control firms, we find that Berkshire investees are highly likely to follow Buffett's investment philosophy, somewhat likely to follow his preferred accounting, disclosure, and compensation policies, but unlikely to follow the board-related governance practices that we can measure. Second, we find some evidence that the business practices of future Berkshire investees are more aligned with Buffett's beliefs in the pre-investment period compared to control firms. Third, we find relatively modest evidence that investees improve a few of their business practices subsequent to Berkshire's initial investment. However, and overall, Buffett does not appear to be especially influential in the subsequent accounting, governance, and investing decisions of Berkshire investees, likely because he has already taken into account the attributes he cares most about in the initial investment decision.