{"title":"How do institutional investors facilitate reporting comparability? Evidence from common institutional ownership in the United States","authors":"Xuanbo Li, Yun Lou, Rencheng Wang, Kaitang Zhou","doi":"10.1111/1911-3846.13028","DOIUrl":null,"url":null,"abstract":"<p>We examine how common institutional investors (CIIs) facilitate the financial reporting comparability (FRC) of US firms. Common ownership increases FRC of firms that are directly owned by CIIs (via a direct effect) and has positive spillover effects on other firms in the same industry. We find spillover effects in two types of firms: (1) those that are commonly owned by different institutional investors but are connected through common firms, and (2) those that do not have any common ownership. These results suggest that the effect of common ownership goes beyond commonly owned firms and extends to non-commonly owned firms. Furthermore, we find two mechanisms for the direct and spillover effects of common ownership on reporting comparability: firms' hiring of common auditors and their adoption of similar accounting practices. Overall, we provide comprehensive evidence on how common institutional ownership benefits the comparability of financial reporting in the United States.</p>","PeriodicalId":10595,"journal":{"name":"Contemporary Accounting Research","volume":"42 2","pages":"1176-1211"},"PeriodicalIF":3.2000,"publicationDate":"2025-03-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Contemporary Accounting Research","FirstCategoryId":"91","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/1911-3846.13028","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
We examine how common institutional investors (CIIs) facilitate the financial reporting comparability (FRC) of US firms. Common ownership increases FRC of firms that are directly owned by CIIs (via a direct effect) and has positive spillover effects on other firms in the same industry. We find spillover effects in two types of firms: (1) those that are commonly owned by different institutional investors but are connected through common firms, and (2) those that do not have any common ownership. These results suggest that the effect of common ownership goes beyond commonly owned firms and extends to non-commonly owned firms. Furthermore, we find two mechanisms for the direct and spillover effects of common ownership on reporting comparability: firms' hiring of common auditors and their adoption of similar accounting practices. Overall, we provide comprehensive evidence on how common institutional ownership benefits the comparability of financial reporting in the United States.
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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