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The role of the Big Four audit firms and the legal system in non-GAAP comparability

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  • Riccardo Macchioni
  • Alessandra Allini
  • Martina Prisco

Abstract

The purpose of this paper is to investigate whether the firms with the same Big Four audit firm and from the same legal system disclose more comparable non-GAAP measures. Using 23,436 pairs of European firms, we hand-collected infor-mation on the non-GAAP measures disclosed in the statement of comprehensive income. The results showed that the firms with the same Big Four audit firm or from the same legal system are positively and significantly associated with non-GAAP comparability. Our work adds to the studies on accounting comparability. Furthermore, it provides fresh insights that support the latest IASB activity on the Primary Financial Statement project, under which the standard setter has en-dorsed ED/2019/7 General Presentation and Disclosures.

Suggested Citation

  • Riccardo Macchioni & Alessandra Allini & Martina Prisco, 2022. "The role of the Big Four audit firms and the legal system in non-GAAP comparability," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2022(1), pages 79-116.
    • Handle: RePEc:fan:frfrfr:v:html10.3280/fr2022-001003
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    More about this item

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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