Disclosure requirements and accounting comparability

Mengyao Cheng

Accounting Research Journal, 2025, vol. 38, issue 3-4, 327-342

Abstract: PurposeThis study aims to examine how disclosure requirements affect accounting comparability, using the introduction of the SEC rule to reduce mandatory disclosures for smaller reporting companies (SRCs) as the empirical setting.Design/methodology/approachThe study uses a generalized difference-in-differences model with firm and year fixed effects.FindingsSRCs have greater accounting comparability than benchmark firms. The effect of SRCs on accounting comparability is weaker for SRCs with greater product similarity and stronger for SRCs with more blockholders. The results indicate that accounting comparability increases as mandatory disclosure requirements are relaxed.Research limitations/implicationsThis study highlights the SRC rule as a determinant of accounting comparability and demonstrates that mandatory disclosure simplification increases accounting comparability.Practical implicationsStrengthening and relaxing disclosure requirements may have asymmetric effects on levels of corporate disclosure. Regulators’ efforts to reduce disclosure burdens may increase accounting comparability among SRCs.Originality/valueThe study reveals the SRC rule as a key determinant of accounting comparability, linking mandatory disclosure simplification to improved comparability and expanding the literature on disclosure requirements and accounting properties.

Keywords: Disclosure requirements; Accounting comparability; The SRC rule (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:arj-03-2025-0087

DOI: 10.1108/ARJ-03-2025-0087

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