Do industry-specific accounting standards matter for capital allocation decisions?

Peter Fiechter, Wayne R. Landsman, Ken V. Peasnell, Annelies RendersAccounting财务报告UTD24

Journal of Accounting and Economics2023-12-28University of Neuchâtel; University of North Carolina at Chapel Hill; Lancaster University; Maastricht University; Maastricht School of ManagementDOI

Citations13

This study examines whether the implementation of industry-specific accounting standards helps capital market participants in making decisions about providing capital to firms. We predict and find an, on average, increase in firms’ capital growth in years following implementation of the relevant industry standard. The increase in capital growth arises primarily from equity issuances and is attributable to the implementation of the standards rather than industry-specific trends or economic shocks. We explore heterogeneity in industry standards and find more pronounced effects for (i) industry standards that reveal new information, provide explicit guidance, or increase accounting uniformity, and (ii) small firms, firms with greater information asymmetry, and firms with greater capital constraints before implementation of the standards. We also find evidence consistent with two channels explaining the documented increase in capital flows: reduction of information asymmetry and increase in financial statement comparability.

ComparabilityInformation asymmetryCost of capitalAccountingFinancial statementEquity (law)EconomicsCapital marketCapital (architecture)BusinessFinancial accountingMonetary economics