Financial Reporting Quality of U.S. Private and Public Firms

49 Pages Posted: 9 Feb 2013 Last revised: 3 May 2013

See all articles by Ole-Kristian Hope

Ole-Kristian Hope

University of Toronto - Rotman School of Management

Wayne B. Thomas

University of Oklahoma

Dushyantkumar Vyas

University of Toronto - Rotman School of Management; University of Toronto at Mississauga

Multiple version iconThere are 2 versions of this paper

Date Written: March 4, 2013

Abstract

Using a new database that contains accounting data for a large sample of U.S. private firms, we provide an investigation of financial reporting quality (FRQ) of U.S. private versus public firms. We find that in general public firms have higher accrual quality and are more conservative. The results are consistent with public firms’ reporting reflecting greater demand for financial information. However, these reporting qualities of public firms are mitigated or eliminated in settings where public firms are more likely to manage earnings or face reduced demand for their financial information. Our study contributes not only to the current debate on private versus public financial accounting but also to the broader literature attempting to understand the determinants of FRQ.

Keywords: private firms, financial reporting quality, public versus private, demand, opportunism, mitigating factors

JEL Classification: M41, G30, M10

Suggested Citation

Hope, Ole-Kristian and Thomas, Wayne B. and Vyas, Dushyantkumar, Financial Reporting Quality of U.S. Private and Public Firms (March 4, 2013). The Accounting Review, Forthcoming, Rotman School of Management Working Paper No. 2213831, Available at SSRN: https://ssrn.com/abstract=2213831

Ole-Kristian Hope (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Hope.aspx

Wayne B. Thomas

University of Oklahoma ( email )

Michael F. Price College of Business,
307 W Brooks, Rm 212B
Norman, OK 73019
United States
405-325-5789 (Phone)
405-325-7348 (Fax)

Dushyantkumar Vyas

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

University of Toronto at Mississauga ( email )

3359 Mississauga Rd N.
3205 William Davis Building
Mississauga, Ontario L5L 1C6
Canada

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