Trait‐based conformity in reporting of selling, general and administrative expenses

Walter Aerts and Tom Van Caneghem

Journal of Accounting & Organizational Change, 2011, vol. 7, issue 2, 108-131

Abstract: Purpose - This paper aims to study conformity tendencies in selling, general and administrative (SG&A) expenses reporting of US firms through an institutional lens. Design/methodology/approach - The paper examines intra‐industry conformity in SG&A reporting over a ten‐year period among a sample of US firms. It measures conformity by comparing a firm's SG&A profile (reported SG&A relative to sales) against a reference group of industry model firms. Findings - Results suggest that a firm's conformity to large and successful firms' SG&A profiles is determined by the tendency of other industry members to imitate those reference models. Large audit firms (i.e. the BigN) are shown to provide an effective diffusion channel of shared industry‐based reporting templates. Different modes of trait imitation in SG&A reporting seem to coexist as long as the industry model firms are defined in terms of size and/or profitability. Research limitations/implications - The paper's results may be of interest to capital market standard‐setters and regulators by showing how regulative ambiguity created by the lack of guidance, feeds social processes that tend to fill the guidance gap. Practical implications - The paper's results show that intra‐industry benchmarking of SG&A reporting plays a significant role in the USA and that international auditor networks are important in establishing and promoting industry‐based reporting formats. Originality/value - The paper shows that the behavior of firms at the industry level can be significant predictors of financial reporting practices at firm level and illustrate specific, socially based mechanisms through which the institutional environment affects financial reporting decisions.

Keywords: Financial reporting; Overhead costs; United States of America (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

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:eme:jaocpp:18325911111139662

DOI: 10.1108/18325911111139662

Access Statistics for this article

Journal of Accounting & Organizational Change is currently edited by Prof Zahirul Hoque

More articles in Journal of Accounting & Organizational Change from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().