Does accounting comparability affect corporate employment decision-making?. Issue 6 (November 2020)

• Record Type: Journal Article
• Authors: Zhang, Zhuang; Ntim, Collins G.; Zhang, Qingjing; Elmagrhi, Mohamed H.
• Is Part Of: British accounting review. Volume 52:Issue 6(2020)
• Publication Date: 2020-11
• Subjects: Accounting comparability -- Labour investment efficiency -- Employment decisions -- Corporate governance; G31 -- G38 -- M41 -- M51; Accounting -- Periodicals; Accounting -- Great Britain -- Periodicals; Comptabilité -- Périodiques; Comptabilité -- Grande-Bretagne -- Périodiques; 657.05
• DOI: 10.1016/j.bar.2020.100937
• Languages: English
• ISSNs: 0890-8389

Abstract

Abstract: This paper investigates whether accounting comparability affects corporate employment decision-making. We find that firms with greater accounting comparability experience a lower degree of inefficiency in labour investments. Further, our results show that accounting comparability affects labour investments via improved external monitoring and internal governance mechanisms. Additional analyses indicate that our findings are not driven by non-labour investments and are robust to alternative explanations and endogeneity concerns. Collectively, the results are consistent with the view that comparability is an effective monitoring tool, which mitigates agency conflict and thereby reduces opportunistic employment decision-making.