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Does Accounting Comparability Affect Corporate Employment Decision-Making?

Zhuang Zhang, Collins G. Ntim, Qingjing Zhang, Mohamed Elmagrhi Orcid Logo

The British Accounting Review, Volume: 52, Issue: 6, Start page: 100937

Swansea University Author: Mohamed Elmagrhi Orcid Logo

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Abstract

This paper investigates whether accounting comparability affects corporate employment decision-making. We find that firms with greater accounting comparability experience a lower degree of inefficiency in labour investments. Further, our results show that accounting comparability affects labour inve...

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Published in: The British Accounting Review
ISSN: 0890-8389
Published: Elsevier BV 2020
Online Access: Check full text

URI: https://cronfa.swan.ac.uk/Record/cronfa54699
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Abstract: This paper investigates whether accounting comparability affects corporate employment decision-making. We find that firms with greater accounting comparability experience a lower degree of inefficiency in labour investments. Further, our results show that accounting comparability affects labour investments via improved external monitoring and internal governance mechanisms. Additional analyses indicate that our findings are not driven by non-labour investments and are robust to alternative explanations and endogeneity concerns. Collectively, the results are consistent with the view that comparability is an effective monitoring tool, which mitigates agency conflict and thereby reduces opportunistic employment decision-making.
Keywords: accounting comparability; labour investment efficiency; employment decisions; corporate governance
College: Faculty of Humanities and Social Sciences
Issue: 6
Start Page: 100937