Financial Reporting Quality and Proprietary Costs

39 Pages Posted: 18 Sep 2004

See all articles by Daniel A. Cohen

Daniel A. Cohen

Texas A&M University College Station

Multiple version iconThere are 2 versions of this paper

Date Written: June 2002


This study investigates the association between proprietary costs and the quality of financial reporting. Interpreting a firm's financial reporting policy as a choice of precision ("quality") for the disclosed accounting earnings, I find evidence that the higher the proprietary costs, the lower the precision ("quality") of reported accounting earnings. This is consistent with analytical work in disclosure theory which suggests that, ceteris paribus, as the proprietary cost of disclosure increases, the quality of disclosure decreases.

Keywords: Financial reporting quality, earnings quality, proprietary costs, disclosure, competition

JEL Classification: M41, M45

Suggested Citation

Cohen, Daniel A., Financial Reporting Quality and Proprietary Costs (June 2002). Available at SSRN: or

Daniel A. Cohen (Contact Author)

Texas A&M University College Station

Department of Accounting
College Station, TX 77843
United States

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