Complexity of financial reporting standards and accounting expertise

Roman Chychyla; Andrew J. Leone; Miguel Minutti-Meza

doi:10.1016/j.jacceco.2018.09.005

Complexity of financial reporting standards and accounting expertise

Roman Chychyla, Andrew J. Leone^*, Miguel Minutti-Meza

^*Corresponding author for this work

Accounting Information and Management

Research output: Contribution to journal › Article › peer-review

96 Scopus citations

Abstract

This study tests whether firms seek to mitigate the adverse effects of Financial Reporting Complexity (FRC) by investing in accounting expertise. We develop a measure of FRC based on the complexity of accounting standards that govern annual disclosures. We find that FRC is positively related to the accounting expertise on a firm's board of directors and audit committee. We also find that accounting expertise mitigates the relation between FRC and negative reporting outcomes. Collectively, this study increases our understanding of the actions firms take to mitigate the negative consequences of FRC, and the role of accounting expertise in this setting.

Original language	English (US)
Pages (from-to)	226-253
Number of pages	28
Journal	Journal of Accounting and Economics
Volume	67
Issue number	1
DOIs	https://doi.org/10.1016/j.jacceco.2018.09.005
State	Published - Feb 2019

Funding

We thank Wayne Guay (Editor), Daniel Taylor (Referee), Khrystyna Bochkay, Sam Bonsall, Rani Hoitash, Brian Miller, Matthew Phillips, Sundaresh Ramnath, Michael Willenborg, and seminar participants at Boston College, Chinese University of Hong Kong, Hong Kong University of Science and Technology, Indiana University, Universidad de Chile, University of Washington, the 2015 Nick Dopuch Accounting Conference at Washington University in St. Louis, and the 2016 European Accounting Association Conference for their helpful comments and suggestions.

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics

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10.1016/j.jacceco.2018.09.005

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title = "Complexity of financial reporting standards and accounting expertise",

abstract = "This study tests whether firms seek to mitigate the adverse effects of Financial Reporting Complexity (FRC) by investing in accounting expertise. We develop a measure of FRC based on the complexity of accounting standards that govern annual disclosures. We find that FRC is positively related to the accounting expertise on a firm's board of directors and audit committee. We also find that accounting expertise mitigates the relation between FRC and negative reporting outcomes. Collectively, this study increases our understanding of the actions firms take to mitigate the negative consequences of FRC, and the role of accounting expertise in this setting.",

author = "Roman Chychyla and Leone, {Andrew J.} and Miguel Minutti-Meza",

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AB - This study tests whether firms seek to mitigate the adverse effects of Financial Reporting Complexity (FRC) by investing in accounting expertise. We develop a measure of FRC based on the complexity of accounting standards that govern annual disclosures. We find that FRC is positively related to the accounting expertise on a firm's board of directors and audit committee. We also find that accounting expertise mitigates the relation between FRC and negative reporting outcomes. Collectively, this study increases our understanding of the actions firms take to mitigate the negative consequences of FRC, and the role of accounting expertise in this setting.

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Complexity of financial reporting standards and accounting expertise

Abstract

Funding

ASJC Scopus subject areas

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