Financial Reporting Uniformity: Its Relation to Comparability and Its Impact on Financial Statement Users

42 Pages Posted: 30 Jul 2018 Last revised: 3 Dec 2019

See all articles by Marcus L. Caylor

Marcus L. Caylor

Kennesaw State University

Dennis J. Chambers

Kennesaw State University

Sunay Mutlu

Kennesaw State University - Michael J. Coles College of Business

Date Written: November 29, 2019

Abstract

We develop a Compustat-based financial reporting uniformity measure based on the presentation of common financial statement line items. We define uniformity as the average ratio of a firm’s pairwise overlaps of non-missing Compustat data items with peer firms. Emphasizing the conceptual difference between uniformity and comparability, we find that uniformity is positively associated with output-based accounting comparability, and this association is impaired with high R&D intensity and frequent losses. We demonstrate that our uniformity measure is positively associated with analyst coverage and analyst forecast accuracy, and negatively associated with analyst forecast dispersion, consistent with presentational uniformity being related to information processing efficiencies. We partition our uniformity measure into separate income statement and balance sheet components. We find that income statement uniformity is associated with greater analyst coverage, while balance sheet uniformity is associated with higher forecast accuracy and lower forecast dispersion.

Keywords: Uniformity, Flexibility, Comparability, Analyst Forecasts, Analyst Coverage, Analyst Forecast Dispersion, Analyst Forecast Accuracy, XBRL

JEL Classification: M41, G10, G14

Suggested Citation

Caylor, Marcus L. and Chambers, Dennis J. and Mutlu, Sunay, Financial Reporting Uniformity: Its Relation to Comparability and Its Impact on Financial Statement Users (November 29, 2019). Available at SSRN: https://ssrn.com/abstract=3221183 or http://dx.doi.org/10.2139/ssrn.3221183

Marcus L. Caylor

Kennesaw State University ( email )

1000 Chastain Road
Kennesaw, GA 30144
United States

Dennis J. Chambers

Kennesaw State University ( email )

560 Parliament Garden Way
MD #0402
Kennesaw, GA 30144
United States
470-578-6375 (Phone)
470-578-9018 (Fax)

Sunay Mutlu (Contact Author)

Kennesaw State University - Michael J. Coles College of Business ( email )

1000 Chastain Road
Kennesaw, GA 30144
United States

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