Accounting Information Comparability And The Economic Consequences Research

Accounting information reflects the operations on the business of enterprises includes financial condition,operating results and cash flows which is using numbers and words by enterprises,it has important reference value to the decision-making behavior of information users.Accounting information is a public good or product,its quality refers to the sum of the qualitative characteristics of accounting information or related products to meet the features which are needed in requirements,accounting information quality is a measure of the accounting information on a variety of criteria.GAAP of major countries in the world have made specific demands for the quality of accounting information.The quality of accounting information will directly or indirectly affect information users to make decisions,and thus affect enterprises’ operations.In general,measuring the quality of accounting information has the following main quality characteristics:relevance,reliability,comparability,timeliness,prudence,etc.,the various quality characteristics are in different levels,and play proper role for different information users in the capital markets,so that play an important function to improve the capital market information disclosure quality and stable the capital market order.Accounting information comparability is one of the most important characteristics of accounting information quality.From the perspective of accounting standards,it refers to the different enterprises have comparable accounting information in the same period,as well as the same enterprise has comparable accounting information in different periods(the latter also known as accounting information consistency).Comparability could help information users identify the similarities and differences between enterprises,and to facilitate users to compare the operations of information between different enterprises,so as to improve the decision usefulness.Relative to the more mature research of other quality characteristics,although comparability issues have been raised earlier in academics and practitioners,because of the quantitative estimates for accounting information comparability is more difficult then those for others,thus results a lack of research in this regard,especially for empirical research.How to enrich the empirical research on accounting information comparability is a focus of accounting academic research.This dissertation reviewed and combined the literature regarding the accounting information comparability in micro-level,has discovered that for the accounting information comparability research,either the earlier normative research,or the empirical research in the last decade,although various studies have made some achievements,there are still large gaps.Overseas research for accounting information comparability are relatively mature,the existing research have come to some conclusions with practical significance on the concept of comparability, calculation methods, factors and economic consequences such as the macro-economic environment(such as the economic system,legal and accounting standards)and micro enterprise features(such as firm size,industry,auditor type,etc.)will all affect the accounting information comparability,while accounting information comparability also has the corresponding economic consequences,for example,improving the enterprise information disclosure,reducing the cost of capital of enterprises,improving investment efficiency of enterprises,having a positive impact on stock prices,and also having a positive impact on analysts predict and management performance prediction,and so on.But in contrast,academics research for accounting information comparability in China has focused on the normative research,and the empirical research is just beginning,and the scope of the study is relatively narrow,which has a lack of in-depth study on the measuring method,factors and economic consequences.Therefore,this article focuses on the study of measuring method and economic consequences of accounting information comparability,in order to improve the domestic existing research about accounting information comparability from a new perspective.Depending on the different definition of accounting information comparability,it has also some different measuring methods.This dissertation describes several current methods about quantitative measure for accounting information comparability,they are respectively based on accounting systems,earnings quality,information delivery,value relevance,rating agencies adjusted,GAAP selection,and disclosure of accounting policies.Various estimates methods have different characteristics and application areas.However,induction of view,accounting information comparability is nothing more than the concept of financial reporting similarity,namely:if two enterprises have the same economic matters,so the enterprises reflected the similar accounting information on this economic issues,and vice versa.Been consistent with some empirical studies,this dissertation also used that definition in empirical studies.Based on the accounting information comparability calculation method existing in literature abroad,according to the concept of accounting system comparable,this dissertation uses a model to quantitatively estimates the accounting information comparability of China’s listed companies of manufacturing in 2008-2013.After measuring the accounting information comparability, based on the capital allocation decisions usefulness,this dissertation sorted some economic consequences,and determined five valuable economic consequences research theme,which have been mentioned in the literature accounting information comparability but has not been in-depthly studied,which are enterprises’ debt financing,investment efficiency,earnings management,analysts prediction and management performance forecast.Accounting information comparability will affect enterprises’ debt financing,which directly affects the enterprises’ capital allocation; comparability will affect enterprises’ investment efficiency, which directly affects the enterprises’ capital allocation;comparability will affect enterprises’ earnings management,earnings management will further affect investment decisions of investors,which could indirectly affect the enterprises’ capital allocation; comparability will affect analysts prediction,which is one of the important reference for investors to make investment decisions,so as to indirectly affects the enterprises’ capital allocation;comparability will affect management performance prediction,which is also one of the important reference for investors to make investment decisions,so as to indirectly affects the enterprises’ capital allocation.Therefore,the five economic consequences are all performances that comparability directly or indirectly affects the enterprises’ capital allocation.In this dissertation,the five economic consequences have been carried out by empirical research and then we found the following conclusions:First,keep other conditions remain unchanged,the higher comparability significantly increased the amount of enterprises’ debt financing. Furthermore, after classified the enterprises as state-owned enterprises and non-state-owned enterprises by the nature of property rights,we found that there are significant differences about the degree of impact that the comparability on debt financing in different ownership enterprises,that is,the role of comparability improving debt financing in state-owned holding enterprises is greater than that in non-state-owned holding enterprises.This dissertation argues that improving accounting information comparability is an effective way to improve corporate debt financing,which has enhanced information users’ understanding about the relationship between accounting information comparability and enterprises’ debt financing,and the conclusions provides a new way and thinking for enterprises to raise debt financing,which has a certain significance for enterprises.Second,keep other conditions remain unchanged,the higher comparability significantly improved enterprises’ investment efficiency,with the specific point of view,it could significantly inhibited both enterprises’ overinvestment and underinvestment.Furthermore,after classified the enterprises as state-owned enterprises and non-state-owned enterprises by the nature of property rights,we found that there are significant differences about the degree of impact that the comparability on investment efficiency in different ownership enterprises,that is,the role of comparability improving investment efficiency in state-owned holding enterprises is greater than that in non-state-owned holding enterprises.After conducting a robustness check,the conclusions remained unchanged.The findings could help to expand the breadth of existing research on enterprises’ investment efficiency,lead us to understand the capital allocation behavior in China’s capital market from a new perspective,and also have a practical significance for enterprises to improve the investment efficiency.Third,keep other conditions remain unchanged,the higher comparability significantly inhibited enterprises’ accrued earnings management,but has no significant impact on enterprises’ real earnings management.This maybe due to wiithing the improvement of accounting information comparability,external investors’ supervision on enterprises is also growing,while the management tends to shift earnings management from accrual to real earnings management, they could also note that information users might increase the oversight on enterprises,especially increase the intensity for the manipulation of real earnings.In the joint action of the two factors,the management has not manipulated the real earnings.Fourth,keep other conditions remain unchanged,the higher comparability could increase the number of analysts tracking for an enterprise,could significantly improve the accuracy of analyst prediction,but the impact of comparability on analysts predict divergence has not been confirmed. After conducting a robustness check, the conclusions remained unchanged.The comparability has a significant impact on analyst prediction accuracy,while has no significant impact on the number of analyst tracking,this may be due to although analysts have begun to take shape in China’s securities industry,because of a late start,low starting point,the number of overall analysts tracking terms is still small,so that the affect of accounting information comparability on the number of analysts tracking has not yet been reflected on a greater extent.Fifth, keep other conditions remain unchanged, the higher comparability could significantly improve the accuracy of management performance forecasts form.Further,we found that the degree of affect of comparability in management forecasts form accuracy is more significant in those enterprises which with smaller asset size,good news,as well as higher growth rate.The conclusions are valuable for enterprises’ information disclosure and investor using the information.Overall, the accounting information comparability has corresponding economic consequences,improving accounting information comparability could effectively bring the positive economic effects and suppress the negative economic effects,which are not only conducive to decision of information users who include creditors,investors,analysts,etc.,but also plays a governance mechanism of accounting information,which could be conducive to enterprises to operate healthily and orderly,increase the economic benefits for the enterprises,and improve operational capability.In this dissertation,the possible innovations are as follows.First,because of there are little quantitative research on accounting information comparability,this dissertation is on the basis of various calculation methods of accounting information comparability in foreign literature,selected the concept of accounting system comparability,estimates the accounting information comparability of China’s manufacturing listed companies on corporate level,which has enriched the quantitative research literature of accounting information comparability.Second,this dissertation empirically test the economic consequences of accounting information comparability,they are the impact of comparability on corporate debt financing,investment efficiency,earnings management,analysts prediction and management performance forecast,which have made up for the lack of economic consequences research of accounting information comparability in a great degree,the conclusion not only provides a reference for information users to use and evaluate accounting information,but also provides reference for enterprises to improve the quality of accounting information and use the governance role of accounting information effectively.This dissertation argues that the implications of the findings are as follows.First,for the enterprises,because of the accounting information comparability has positive economic consequences,then the Chinese enterprises,especially listed companies should pay attention to improve the accounting information comparability so as to improve their disclosure of accounting information quality to adapt to the development of capital market information disclosure system,thereby improving the efficiency of capital allocation in the capital markets,play the governance mechanisms of accounting information.Second,for the information users who are in the decision-making process, when they focus on the characteristics of accounting information quality,it is necessary for them to notice the comparability.Comparability could largely increase the information content and the reference value for information users,is beneficial for information users,including creditors,investors,analysts,and so on,to make correct and effective analysis and decision.Third,for the regulatory agencies(firms,SFC),they should strengthen business supervision,promote the improvement of the accounting information comparability.Although there is no consistent findings prove that the implementation of accounting standards will improve the accounting information comparability,from the practical point of view,the strict implementation of accounting standards for business is at least do no harm to accounting information comparability.Regulators need to strengthen the monitor efforts on implementation of accounting standards for enterprises so as to reduce the space of business to manipulate accounting information freely,promote improving the quality of accounting information which include comparability.In this dissertation,the possible limitations are as the following three aspects.First,the sample in our study includs only Chinese manufacturing listed companies.Whether in other industries will come to a similar conclusion,this dissertation does not involve.Second,the method of estimating accounting comparability information in this dissertation is based on accounting systems comparability,but the current academic has not confirm whether this method is the most appropriate method. Given the variety of measuring method of comparability,whether the use of different measuring methods will come to the same conclusion,this dissertation does not involve.Third,we only studied the accounting information comparability for different enterprises in the same period( horizontal comparability),while the comparability of an enterprise in different periods(longitudinal comparability or consistency)has not been researched.Whether the latter has the same economic consequences with horizontal comparability,this dissertation does not involve.This dissertation argues that we need to continue study the accounting information comparability on the following four aspects in the future.First,the different measuring methods for accounting information comparability. Although this article describes the measuring methods for comparability that exsisting in current foreign literature,due to the differences in the institutional environment,corporate governance and other aspects,whether each method is applicable to Chinese capital market and whether has a different economic consequences,it is worth to further study.Second,the study for the factors of accounting information comparability.Limited by the scope of this study,this article has only researched the economic consequences of accounting information comparability in empirical research,and has not involved its factors.As been described previously,the accounting information comparability has corresponding economic consequences,but how to improve comparability,that is,how to study of the factors of comparability,is one of the key content of future research.Third,the study of other economic consequences of accounting information comparability.In addition to the five aspects of economic consequences of accounting information comparability which has been referred in this document,there are of cause some economic consequences in other areas,such as the interaction effect on the stock price,the impact on the type of audit opinion,and so on,they are all the space themes in future studying.Fourth,the study for longitudinal comparability(consistency).Whether the measuring method for longitudinal comparability is similar with that for the horizontal comparability,and what new economic consequences will the longitudinal comparability has,are both worthy of further study in the future.