Firm life cycle and financial statement comparability

This paper examines how financial statement comparability varies between firms in the mature stage of their life cycle and firms in other life cycle stages. We hypothesize that mature firms are inclined to produce financial statements that are comparable among their industry peers. Using a sample of U.S. listed companies from 1987 to 2019, we find evidence to support our hypothesis. We also find that this association between life cycle and comparability is moderated by information asymmetry. A battery of robustness tests validates our initial findings. We extend the financial statement comparability literature by providing evidence on a determinant of comparability. Our study provides insights to policymakers regarding the necessity to consider firm life cycle when designing financial accounting standards.