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) |
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Pages (from-to) | 226-253 |
Number of pages | 28 |
Journal | Journal of Accounting and Economics |
Volume | 67 |
Issue number | 1 |
DOIs | |
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