Improvements in investment efficiency prior to a mandated accounting change: Evidence from ASC 842

IF 3.2 3区 管理学 Q1 BUSINESS, FINANCE
Derek Christensen, Daniel P. Lynch, Clay Partridge
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引用次数: 0

Abstract

Prior literature on the relationship between financial reporting and investment efficiency generally overlooks the connection between firms' financial and managerial reporting systems. As a result, it is difficult to determine whether increases in the quality of firms' internal information environments (IIQ) and/or the quality of their external information environments (EIQ) explain improvements in investment efficiency following financial reporting changes. Leveraging the transition window to the new lease standard (Accounting Standards Codification [ASC] 842), we use a difference-in-differences design and find that firms that materially change their internal controls due to ASC 842 (treatment firms) significantly improve their investment efficiency in the final year of the transition window. Multiple falsification tests rule out that contemporaneous improvements in treatment firms' EIQ explain our finding. Additional channel analyses suggest the increases in IIQ for treatment firms predominantly alleviate moral hazard risk between central and divisional managers within the firm, leading to a reduction in empire building. Our findings extend the literature on the relationship between financial reporting and investment efficiency. They also contribute to the literature on the consequences of ASC 842 by answering the FASB's call for research on how ASC 842 affects firms' asset utilizations.

强制性会计变更前投资效率的改进:来自ASC 842的证据
先前关于财务报告与投资效率之间关系的文献通常忽略了公司财务和管理报告系统之间的联系。因此,很难确定企业内部信息环境质量(IIQ)和/或外部信息环境质量(EIQ)的提高是否解释了财务报告变更后投资效率的提高。利用新租赁准则(会计准则法规[ASC] 842)的过渡窗口,我们使用差异中的差异设计,发现由于ASC 842而实质性改变其内部控制的公司(处理公司)在过渡窗口的最后一年显着提高了投资效率。多重证伪检验排除了治疗公司的EIQ同时改善解释了我们的发现。额外的渠道分析表明,治疗公司的IIQ的提高主要减轻了公司内部中央和部门经理之间的道德风险,导致帝国建设的减少。我们的研究结果扩展了有关财务报告与投资效率之间关系的文献。他们还通过回应FASB关于ASC 842如何影响公司资产利用的研究呼吁,为ASC 842的后果的文献做出了贡献。
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来源期刊
CiteScore
6.20
自引率
11.10%
发文量
97
期刊介绍: Contemporary Accounting Research (CAR) is the premiere research journal of the Canadian Academic Accounting Association, which publishes leading- edge research that contributes to our understanding of all aspects of accounting"s role within organizations, markets or society. Canadian based, increasingly global in scope, CAR seeks to reflect the geographical and intellectual diversity in accounting research. To accomplish this, CAR will continue to publish in its traditional areas of excellence, while seeking to more fully represent other research streams in its pages, so as to continue and expand its tradition of excellence.
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