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查核品質屬性、財務報表可比性與投資效率
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by retrospective application of the new accounting policy, and the actual effect on the
opening balance of retained earnings for the immediately preceding financial year. Hence,
in this paper I argue the audit firm or auditor partner is one of the determinants of
comparability.
Theoretical research posits that better earnings quality can mitigate the problems of
information asymmetry (i.e., moral hazard or adverse selection) and then induce a lower
level of investment inefficiency (Leuz and Verrecchia, 2000; Verrecchia, 2001). Prior
empirical research further shows several channels through which earnings quality can
improve investment efficiency (Biddle and Hilary, 2006; Biddle, Hillary, and Verdi, 2009;
Chen, Hope, Li, and Wang, 2011), for example, strengthening the monitoring function of
stakeholders or reducing seasoned equity offering (SEO) underpricing. Benchmarking or
industry peer comparison is a popular current management accounting tool, implying
comparability may be useful for internal decision making (Gong, Li, and Shin, 2011).
While prior studies have examined how comparability affects the decision quality of
external users, such as financial analysts, this paper provides the first attempt to analyze
the effect of comparability on the decisions of internal users (i.e., investment decisions).
2. Design/Methodology/Approach
This paper focuses on firms listed in the Taiwan Stock Exchange (TSE) and GreTai
Securities Exchange (GTSE) from 2005 to 2011 and tests the following hypotheses:
H1a: Other things being equal, audit firm tenure is positively associated with
financial statement comparability.
H1b: Other things being equal, audit partner experience is positively associated with
financial statement comparability.
H2a: Other things being equal, financial statement comparability is negatively
associated with underinvestment.
H2b: Other things being equal, financial statement comparability is negatively
associated with overinvestment.
All data, including financial and corporate governance metrics, were obtained from
the Taiwan Economic Journal (TEJ) database. There were 10,348 firm-year observations
during the sample period. Observations with incomplete data on financial metrics and
firms with insufficient data for discretionary accruals or comparability calculations were
excluded. The final selection yielded 3,852 firm-year observations.