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Corporate culture and financial statement comparability

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  • Afzali, Mansoor

Abstract

In this paper, I empirically examine the influence of corporate culture on the comparability of financial statements. I predict that firms with strong corporate cultures have less-opportunistic managers, who make homogenous decisions when faced with similar economic events, resulting in greater accounting comparability. For a sample of U.S. companies, I find empirical evidence consistent with this prediction: firms with strong corporate cultures have greater peer- and industry-level comparability. These results are robust to using an entropy-balanced sample, correcting for sample selection bias using Heckman's two-step procedure, and employing different measures of corporate culture strength. Further analysis reveals that sudden CEO turnovers that move firms towards (away from) a stronger corporate culture positively (negatively) influence post-turnover accounting comparability. My results provide new insights on the role of corporate culture for financial reporting.

Suggested Citation

  • Afzali, Mansoor, 2023. "Corporate culture and financial statement comparability," Advances in accounting, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:advacc:v:60:y:2023:i:c:s0882611022000591
    DOI: 10.1016/j.adiac.2022.100640
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    More about this item

    Keywords

    Corporate culture; Financial statement comparability;

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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