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Financial statement comparability and accounting fraud

Author

Listed:
  • Belen Blanco
  • Sandip Dhole
  • Ferdinand A. Gul

Abstract

We examine the association between financial statement comparability and the likelihood of accounting fraud. Prior research documents a negative association between the quality of a firm's reporting environment and accounting fraud. We build on this literature and show that poor financial statement comparability is associated with a greater likelihood of accounting fraud. We also find that accounting comparability declines over time as the year of fraud detection approaches and that the association between comparability and fraud becomes more negative over this time. In addition, we find that financial statement comparability improves after fraud detection, consistent with the notion that managers improve their financial reporting quality after fraud.

Suggested Citation

  • Belen Blanco & Sandip Dhole & Ferdinand A. Gul, 2023. "Financial statement comparability and accounting fraud," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 50(7-8), pages 1166-1205, July.
    • Handle: RePEc:bla:jbfnac:v:50:y:2023:i:7-8:p:1166-1205
    DOI: 10.1111/jbfa.12652
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