IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v9y2017i8p1406-d107599.html
   My bibliography  Save this article

Are Commercial Financial Databases Reliable? New Evidence from Korea

Author

Listed:
  • Hyunjung Nam

    (Graduate School of International Studies, Dong-A University, Busan 49236, Korea)

  • Won Gyun No

    (Rutgers Business School, Rutgers, The Staute University of New Jersey, Newark, NJ 07102-3122, USA)

  • Youngsu Lee

    (College of Business, California State University, Chico, 95929 CA, USA)

Abstract

The quality of financial information is crucial for the effective decision-making of practitioners and academics. A number of studies have shown the existence of errors in proprietary databases provided by financial data aggregators (e.g., Compustat and Value Line) in advanced markets like the U.S. However, no study has examined the quality of the financial data offered by aggregators in emerging markets. Research on such markets is needed as financial investment frequently occurs in emerging markets due to the globalization of capital. The purpose of this study is to fill this gap by investigating whether financial data provided by aggregators is the same as the data reported in firms’ financial statements in emerging markets. Another purpose of this study is to examine the impact on academic research. Comparing the 18 most widely-used financial items found in the original filings of firms with the corresponding data provided by all three data aggregators currently available in South Korea (i.e., DataGuide, KisValue, and TS2000), we found a considerable number of differences; many of the differences are substantially greater than conventional materiality. We also found that the differences between data sources lead to different prediction results in bankruptcy prediction model.

Suggested Citation

  • Hyunjung Nam & Won Gyun No & Youngsu Lee, 2017. "Are Commercial Financial Databases Reliable? New Evidence from Korea," Sustainability, MDPI, vol. 9(8), pages 1-23, August.
    • Handle: RePEc:gam:jsusta:v:9:y:2017:i:8:p:1406-:d:107599
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/9/8/1406/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/9/8/1406/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Balcaen, Sofie & Ooghe, Hubert, 2006. "35 years of studies on business failure: an overview of the classic statistical methodologies and their related problems," The British Accounting Review, Elsevier, vol. 38(1), pages 63-93.
    2. Ravi Kumar, P. & Ravi, V., 2007. "Bankruptcy prediction in banks and firms via statistical and intelligent techniques - A review," European Journal of Operational Research, Elsevier, vol. 180(1), pages 1-28, July.
    3. Emie Famieza Zainudin & Hafiza Aishah Hashim, 2016. "Detecting fraudulent financial reporting using financial ratio," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 14(2), pages 266-278, October.
    4. Thai-Ha Le & Jungsuk Kim & Minsoo Lee, 2016. "Institutional Quality, Trade Openness, and Financial Sector Development in Asia: An Empirical Investigation," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(5), pages 1047-1059, May.
    5. Allen, Arthur & Cho, Jang Youn & Jung, Kooyul, 1997. "Earnings forecast errors: Comparative evidence from the Pacific-Basin capital markets," Pacific-Basin Finance Journal, Elsevier, vol. 5(1), pages 115-129, February.
    6. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 3.
    7. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 2.
    8. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 2.
    9. Winkler, Jens & Kuklinski, Christian Paul Jian-Wei & Moser, Roger, 2015. "Decision making in emerging markets: The Delphi approach's contribution to coping with uncertainty and equivocality," Journal of Business Research, Elsevier, vol. 68(5), pages 1118-1126.
    10. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 4.
    11. Jie Gao & Jiancai Wang, 2017. "Is Working Capital Information Useful for Financial Analysts? Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(5), pages 1135-1151, May.
    12. B Baesens & C Mues & D Martens & J Vanthienen, 2009. "50 years of data mining and OR: upcoming trends and challenges," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 60(1), pages 16-23, May.
    13. Efendi, Jap & Park, Jin Dong & Smith, L. Murphy, 2014. "Do XBRL filings enhance informational efficiency? Early evidence from post-earnings announcement drift," Journal of Business Research, Elsevier, vol. 67(6), pages 1099-1105.
    14. Bennin, Robert, 1980. "Error Rates in CRSP and COMPUSTAT: A Second Look," Journal of Finance, American Finance Association, vol. 35(5), pages 1267-1271, December.
    15. Rosenberg, Barr & Houglet, Michel, 1974. "Error Rates in CRSP and Compustat Data Bases and their Implications," Journal of Finance, American Finance Association, vol. 29(4), pages 1303-1310, September.
    16. Altman, Edward I. & Haldeman, Robert G. & Narayanan, P., 1977. "ZETATM analysis A new model to identify bankruptcy risk of corporations," Journal of Banking & Finance, Elsevier, vol. 1(1), pages 29-54, June.
    17. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    18. Bryce, Mitchell & Ali, Muhammad Jahangir & Mather, Paul R., 2015. "Accounting quality in the pre-/post-IFRS adoption periods and the impact on audit committee effectiveness — Evidence from Australia," Pacific-Basin Finance Journal, Elsevier, vol. 35(PA), pages 163-181.
    19. Ko, Kuan-Cheng & Lin, Shinn-Juh & Su, Hsiang-Ju & Chang, Hsing-Hua, 2014. "Value investing and technical analysis in Taiwan stock market," Pacific-Basin Finance Journal, Elsevier, vol. 26(C), pages 14-36.
    20. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 4.
    21. Edward I. Altman, 1968. "The Prediction Of Corporate Bankruptcy: A Discriminant Analysis," Journal of Finance, American Finance Association, vol. 23(1), pages 193-194, March.
    22. Ohlson, Ja, 1980. "Financial Ratios And The Probabilistic Prediction Of Bankruptcy," Journal of Accounting Research, Wiley Blackwell, vol. 18(1), pages 109-131.
    23. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 3.
    24. Yoon, Hyungwook & Zo, Hangjung & Ciganek, Andrew P., 2011. "Does XBRL adoption reduce information asymmetry?," Journal of Business Research, Elsevier, vol. 64(2), pages 157-163, February.
    25. Liang, Deron & Lu, Chia-Chi & Tsai, Chih-Fong & Shih, Guan-An, 2016. "Financial ratios and corporate governance indicators in bankruptcy prediction: A comprehensive study," European Journal of Operational Research, Elsevier, vol. 252(2), pages 561-572.
    26. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 1.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kuang-Hua Hu & Sin-Jin Lin & Ming-Fu Hsu, 2018. "A Fusion Approach for Exploring the Key Factors of Corporate Governance on Corporate Social Responsibility Performance," Sustainability, MDPI, vol. 10(5), pages 1-18, May.
    2. Kritana Prueksakorn & Cheng-Xu Piao & Hyunchul Ha & Taehyeung Kim, 2015. "Computational and Experimental Investigation for an Optimal Design of Industrial Windows to Allow Natural Ventilation during Wind-Driven Rain," Sustainability, MDPI, vol. 7(8), pages 1-22, August.
    3. Hualin Xie & Jinlang Zou & Hailing Jiang & Ning Zhang & Yongrok Choi, 2014. "Spatiotemporal Pattern and Driving Forces of Arable Land-Use Intensity in China: Toward Sustainable Land Management Using Emergy Analysis," Sustainability, MDPI, vol. 6(6), pages 1-17, May.
    4. Stephan E. Maurer & Andrei V. Potlogea, 2021. "Male‐biased Demand Shocks and Women's Labour Force Participation: Evidence from Large Oil Field Discoveries," Economica, London School of Economics and Political Science, vol. 88(349), pages 167-188, January.
    5. Tie Hua Zhou & Ling Wang & Keun Ho Ryu, 2015. "Supporting Keyword Search for Image Retrieval with Integration of Probabilistic Annotation," Sustainability, MDPI, vol. 7(5), pages 1-18, May.
    6. T. Karski, 2019. "Opinions and Controversies in Problem of The So-Called Idiopathic Scoliosis. Information About Etiology, New Classification and New Therapy," Biomedical Journal of Scientific & Technical Research, Biomedical Research Network+, LLC, vol. 12(5), pages 9612-9616, January.
    7. Sung-Won Park & Sung-Yong Son, 2017. "Cost Analysis for a Hybrid Advanced Metering Infrastructure in Korea," Energies, MDPI, vol. 10(9), pages 1-18, September.
    8. Wesley Mendes-da-Silva, 2020. "What Makes an Article be More Cited?," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 24(6), pages 507-513.
    9. Martin Valtierra-Rodriguez & Juan Pablo Amezquita-Sanchez & Arturo Garcia-Perez & David Camarena-Martinez, 2019. "Complete Ensemble Empirical Mode Decomposition on FPGA for Condition Monitoring of Broken Bars in Induction Motors," Mathematics, MDPI, vol. 7(9), pages 1-19, August.
    10. Akca Yasar & Gokhan Ozer, 2016. "Determination the Factors that Affect the Use of Enterprise Resource Planning Information System through Technology Acceptance Model," International Journal of Business and Management, Canadian Center of Science and Education, vol. 11(10), pages 1-91, September.
    11. Julián Miranda & Angélica Flórez & Gustavo Ospina & Ciro Gamboa & Carlos Flórez & Miguel Altuve, 2020. "Proposal for a System Model for Offline Seismic Event Detection in Colombia," Future Internet, MDPI, vol. 12(12), pages 1-17, December.
    12. Wisdom Akpalu & Mintewab Bezabih, 2015. "Tenure Insecurity, Climate Variability and Renting out Decisions among Female Small-Holder Farmers in Ethiopia," Sustainability, MDPI, vol. 7(6), pages 1-16, June.
    13. Wei Chen & Shu-Yu Liu & Chih-Han Chen & Yi-Shan Lee, 2011. "Bounded Memory, Inertia, Sampling and Weighting Model for Market Entry Games," Games, MDPI, vol. 2(1), pages 1-13, March.
    14. Serrano-Cinca, Carlos & Gutiérrez-Nieto, Begoña & Bernate-Valbuena, Martha, 2019. "The use of accounting anomalies indicators to predict business failure," European Management Journal, Elsevier, vol. 37(3), pages 353-375.
    15. David Harborth & Sebastian Pape, 2020. "Empirically Investigating Extraneous Influences on the “APCO” Model—Childhood Brand Nostalgia and the Positivity Bias," Future Internet, MDPI, vol. 12(12), pages 1-16, December.
    16. Ping Wang & Jie Wang & Guiwu Wei & Cun Wei, 2019. "Similarity Measures of q-Rung Orthopair Fuzzy Sets Based on Cosine Function and Their Applications," Mathematics, MDPI, vol. 7(4), pages 1-23, April.
    17. Peterson, Willis L., 1973. "Publication Productivities Of U.S. Economics Department Graduates," Staff Papers 14105, University of Minnesota, Department of Applied Economics.
    18. Taeyeoun Roh & Yujin Jeong & Byungun Yoon, 2017. "Developing a Methodology of Structuring and Layering Technological Information in Patent Documents through Natural Language Processing," Sustainability, MDPI, vol. 9(11), pages 1-19, November.
    19. He-Yau Kang & Amy H. I. Lee & Tzu-Ting Huang, 2016. "Project Management for a Wind Turbine Construction by Applying Fuzzy Multiple Objective Linear Programming Models," Energies, MDPI, vol. 9(12), pages 1-15, December.
    20. Vasilyeva, Olga, 2021. "Agro-food clusters in the Republic of Kazakhstan: assessment and prospects of development," Economic Consultant, Roman I. Ostapenko, vol. 34(2), pages 13-20.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:9:y:2017:i:8:p:1406-:d:107599. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.