Research Details

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.

Type

Article

Author(s)

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

Date Published

2019

Citations

Leone, Andrew J., Roman Chychyla, and Miguel Minutti-Meza. 2019. Accounting Expertise and Financial Reporting Complexity. Journal of Accounting and Economics.(1): 226-253.