Are Commercial Financial Databases Reliable? New Evidence from Korea

Hyunjung Nam, Won Gyun No and Youngsu Lee
Additional contact information
Hyunjung Nam: Graduate School of International Studies, Dong-A University, Busan 49236, Korea
Won Gyun No: Rutgers Business School, Rutgers, The Staute University of New Jersey, Newark, NJ 07102-3122, USA
Youngsu Lee: College of Business, California State University, Chico, 95929 CA, USA

Sustainability, 2017, vol. 9, issue 8, 1-23

Abstract: The quality of financial information is crucial for the effective decision-making of practitioners and academics. A number of studies have shown the existence of errors in proprietary databases provided by financial data aggregators (e.g., Compustat and Value Line) in advanced markets like the U.S. However, no study has examined the quality of the financial data offered by aggregators in emerging markets. Research on such markets is needed as financial investment frequently occurs in emerging markets due to the globalization of capital. The purpose of this study is to fill this gap by investigating whether financial data provided by aggregators is the same as the data reported in firms’ financial statements in emerging markets. Another purpose of this study is to examine the impact on academic research. Comparing the 18 most widely-used financial items found in the original filings of firms with the corresponding data provided by all three data aggregators currently available in South Korea (i.e., DataGuide, KisValue, and TS2000), we found a considerable number of differences; many of the differences are substantially greater than conventional materiality. We also found that the differences between data sources lead to different prediction results in bankruptcy prediction model.

Keywords: Keyword: data quality; absolute difference; material difference; financial information aggregator; Ohlson’s bankruptcy prediction model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/9/8/1406/pdf (application/pdf)
https://www.mdpi.com/2071-1050/9/8/1406/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:9:y:2017:i:8:p:1406-:d:107599

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().