Are the Individual and Collective Roles of Financial Reporting Quality Measures the Same? Evidence in the Context of Information Uncertainty

Spanish Journal of Finance and Accounting, 48 (2): 160-202

69 Pages Posted: 1 May 2018 Last revised: 8 Apr 2019

Date Written: April 22, 2018

Abstract

An implicit premise of much empirical research is that the individual role and the collective role of a financial reporting quality (quality) measure are the same, in the sense that the impacts of a quality measure on a dependent variable, without and with considering the trade-off/interaction and combination with other quality measures, are the same. I question whether the two roles are really the same. I conduct my investigation in the context of information uncertainty. I employ conventional statistical methods to explore the individual role of quality measures and use the decision tree method to explore their collective role. My findings reveal some significant differences between the two roles. Further, the findings indicate that the collective role of a quality measure can differ in accordance with the group to which the quality measure belongs. Overall, the findings reject this premise that the individual and collective roles of quality measures are the same. Moreover, the findings enhance the understanding of the collective role of quality measures.

Keywords: accounting; financial reporting quality; uncertainty; collective role; decision tree; trade-off

JEL Classification: M410

Suggested Citation

Hesarzadeh, Reza, Are the Individual and Collective Roles of Financial Reporting Quality Measures the Same? Evidence in the Context of Information Uncertainty (April 22, 2018). Spanish Journal of Finance and Accounting, 48 (2): 160-202, Available at SSRN: https://ssrn.com/abstract=3166748

Reza Hesarzadeh (Contact Author)

Ferdowsi University of Mashhad ( email )

Mashhad, 9177948974
Iran

HOME PAGE: http://Hesarzadeh.profcms.um.ac.ir/

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