Financial statement comparability and managers’ use of corporate resources

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

8 Scopus Citations
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Original languageEnglish
Pages (from-to)1697-1742
Journal / PublicationAccounting and Finance
Issue numberS1
Online published15 Apr 2020
Publication statusPublished - Apr 2021


We examine the impact of financial statement comparability on managers’ use of corporate resources. Using the comparability measures of De Franco, Kothari, and Verdi as proxies for financial statement comparability, we find that, as comparability increases, corporate cash holdings are worth more to outside shareholders, capital expenditure contributes more to shareholder value, and corporate acquisitions made by the firm have a more favourable impact on shareholder value. We also find that higher comparability leads to both lower under- and overinvestment. Our results suggest that comparability facilitates investor monitoring of managers’ use of corporate resources, which enhances shareholder value.

Research Area(s)

  • Acquisitions, Capital expenditure, Cash holdings, Financial statement comparability, Shareholder value

Bibliographic Note

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