The Relation Between Accounting Comparability and Firm Productivity

Chircop, J. (2024) The Relation Between Accounting Comparability and Firm Productivity. Journal of Accounting, Auditing and Finance, 39 (1). 29 - 56. ISSN 0148-558X

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Abstract

Using a comprehensive sample of U.S. manufacturing firms from 1992 to 2015, I test for the association between accounting comparability and firm productivity. I posit that increased accounting comparability facilitates learning from peer firms ultimately increasing firm productivity. Results show that accounting comparability is positively related to firm productivity and that one channel for this relation is improvement in inventory management. In cross-sectional analysis, I find that the relation between accounting comparability and firm productivity is stronger when (a) peer firms exhibit higher productivity and provide more informative filings; (b) subject firms exhibit higher product similarity with peer firms and face stiffer competition, and (c) subject firms operate in industries characterized by higher accounting quality.