1 Introduction
2 Institutional and Regulatory Background
3 Literature and Hypothesis Development
3.1 Reporting Opportunities for a Change in De Facto Comparability
3.2 Reporting Incentives Affecting De Facto Comparability
3.3 Hypothesis on De Facto Comparability Effects of the BilMoG Reform
4 Research Design
4.1 Comparability Measurement
4.2 Identification Strategy
4.3 Sample Selection
Firm years | Firms | |
---|---|---|
Firm years (firms) belonging to consolidated accounts of German firms in the BvD Amadeus database (version: January 2014) between 1998 and 2013 | 30,700 | 4,867 |
– Remaining firm years (firms) belonging to firms with short fiscal years (fiscal years with less than 12 reporting months) | (31) | (0) |
– Remaining duplicate firm years (firms) | (12) | (0) |
– Remaining firm years (firms) belonging to firms with listed equity | (4,965) | (486) |
– Remaining firm years (firms) between 1998 and 2002 or between 2012 and 2013 | (1,915) | (42) |
= Relevant firm years (firms) in the BvD Amadeus database between 2003 and 2011 | =23,777 | =4,339 |
– Remaining firm years (firms) with missing industry (SIC-code) information | (10) | (3) |
– Remaining firm years (firms) belonging to banks, insurance, and real estate firms (SIC1
it = 6) | (11,369) | (1,874) |
– Remaining firm years (firms) of voluntary BilMoG early adopters in 2009 and 2010 | (304) | (55) |
– Remaining firm years (firms) of HGB firms that had no obligation to report under BilMoG in 2010 (because of alternative fiscal year-ends) | (56) | (1) |
– Remaining firms years (firms) with missing CF
it+1 information (necessary for comparability measure calculations) | (2,544) | (210) |
– Remaining firm years (firms) with missing NI
it information (necessary for comparability measure calculations) | (1,637) | (265) |
= Firm years in full sample (which comprises all firms involved in the matching procedures) | =7,857 | =1,931 |
5 Main Results
5.1 Descriptive Statistics
IFRS
it = 0 |
IFRS
it = 1 | Mean diff. | Mean diff. | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Obs. | Mean | Median | Std. Dev. | Obs. | Mean | Median | Std. Dev. | |||
AKTG
it
| 379 | 0.2190 | 0.0000 | 0.4141 | 379 | 0.4644 | 0.0000 | 0.4994 | −0.2454*** | 0.0000*** |
BIG5
it
| 379 | 0.5462 | 1.0000 | 0.4985 | 379 | 0.6860 | 1.0000 | 0.4647 | −0.1398*** | 0.0000*** |
CAP_INT
it
| 378 | 0.3338 | 0.2985 | 0.2231 | 379 | 0.2613 | 0.1997 | 0.2142 | 0.0725*** | 0.0987*** |
CF
it+1
| 379 | 0.1184 | 0.1158 | 0.1091 | 379 | 0.1101 | 0.1132 | 0.1142 | 0.0083 | 0.0026 |
FO_OWN
it
| 379 | 0.2480 | 0.0000 | 0.4324 | 379 | 0.4565 | 0.0000 | 0.4988 | −0.2084*** | 0.0000*** |
FO_SUB
it
| 363 | 0.1758 | 0.0000 | 0.2647 | 346 | 0.2866 | 0.1667 | 0.3260 | −0.1108*** | −0.1667*** |
GROWTH
it
| 375 | 0.0444 | 0.0429 | 0.2098 | 376 | 0.0941 | 0.0468 | 0.2996 | −0.0497*** | −0.0039 |
IND_GROWTH
it
| 379 | 0.0223 | 0.0468 | 0.0784 | 379 | 0.0223 | 0.0468 | 0.0784 | 0.0000 | 0.0000 |
LEV
it
| 379 | 0.6577 | 0.6635 | 0.2005 | 379 | 0.6876 | 0.6902 | 0.2004 | −0.0299** | −0.0267 |
NI
it
| 379 | 0.0372 | 0.0291 | 0.0703 | 379 | 0.0321 | 0.0326 | 0.0875 | 0.0052 | −0.0035 |
SIZE
it
| 379 | 19.1163 | 19.2441 | 1.3359 | 379 | 19.1429 | 19.2441 | 1.3772 | −0.0266 | 0.0000 |
IFRS
it = 0 |
IFRS
it = 1 | Mean diff. | Mean diff. | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Obs. | Mean | Median | Std. Dev. | Obs. | Mean | Median | Std. Dev. | |||
AKTG
it
| 162 | 0.2160 | 0.0000 | 0.4128 | 162 | 0.4136 | 0.0000 | 0.4940 | −0.1975*** | 0.0000*** |
BIG5
it
| 162 | 0.5309 | 1.0000 | 0.5006 | 162 | 0.7222 | 1.0000 | 0.4493 | −0.1914*** | 0.0000*** |
CAP_INT
it
| 162 | 0.3500 | 0.3027 | 0.2317 | 162 | 0.2316 | 0.1708 | 0.2029 | 0.1184*** | 0.1319*** |
CF
it+1
| 162 | 0.1117 | 0.0982 | 0.1018 | 162 | 0.1003 | 0.1100 | 0.1183 | 0.0114 | −0.0118 |
FO_OWN
it
| 162 | 0.2716 | 0.0000 | 0.4462 | 162 | 0.5123 | 1.0000 | 0.5014 | −0.2407*** | −1.0000*** |
FO_SUB
it
| 157 | 0.1834 | 0.0000 | 0.2662 | 151 | 0.2823 | 0.2000 | 0.3150 | −0.0989*** | −0.2000*** |
GROWTH
it
| 159 | 0.1333 | 0.0823 | 0.2116 | 161 | 0.1120 | 0.0606 | 0.2510 | 0.0213 | 0.0218* |
IND_GROWTH
it
| 162 | 0.0877 | 0.0680 | 0.0581 | 162 | 0.0877 | 0.0680 | 0.0581 | 0.0000 | 0.0000 |
LEV
it
| 162 | 0.6090 | 0.6312 | 0.1949 | 162 | 0.6887 | 0.6793 | 0.2104 | −0.0797*** | −0.0481*** |
NI
it
| 162 | 0.0461 | 0.0380 | 0.0628 | 162 | 0.0348 | 0.0360 | 0.0875 | 0.0113 | 0.0020 |
SIZE
it
| 162 | 19.1985 | 19.2420 | 1.3268 | 162 | 19.2335 | 19.2598 | 1.3941 | −0.0350 | −0.0179 |
AKTG
it
|
BIG5
it
|
CAP_INT
it
|
CF
it+1
|
FO_OWN
it
|
FO_SUB
it
|
GROWTH
it
|
IFRS
it
|
IND_GROWTH
it
|
LEV
it
|
NI
it
|
SIZE
it
| |
---|---|---|---|---|---|---|---|---|---|---|---|---|
AKTG
it
|
1.0000
| 0.1048 | −0.0839 | 0.0405 | −0.0613 | 0.1431* | 0.0959 | 0.2174* | 0.0100 | −0.1256* | 0.1160* | −0.0203 |
BIG5
it
| 0.0947 |
1.0000
| 0.0332 | 0.0302 | 0.1725* | 0.0897 | −0.0445 | 0.1595* | −0.0265 | −0.0116 | −0.0003 | 0.2860* |
CAP_INT
it
| −0.1168* | 0.0533 |
1.0000
| 0.0388 | −0.2628* | −0.1868* | −0.0580 | −0.1882* | −0.0348 | −0.1042 | −0.1100* | 0.2334* |
CF
it+1
| −0.0151 | 0.0185 | 0.0426 |
1.0000
| −0.0294 | 0.1351* | 0.0523 | −0.0040 | 0.0300 | −0.0881 | 0.3174* | −0.0731 |
FO_OWN
it
| −0.0263 | 0.1662* | −0.2676* | −0.0353 |
1.0000
| 0.0233 | −0.0030 | 0.2270* | −0.0315 | 0.1946* | −0.0973 | 0.0418 |
FO_SUB
it
| 0.0986 | 0.0828 | −0.2141* | 0.0981 | 0.0373 |
1.0000
| 0.0397 | 0.1896* | 0.0743 | −0.1276* | 0.1861* | 0.0043 |
GROWTH
it
| 0.0529 | −0.0806 | −0.0623 | −0.0129 | 0.0495 | −0.0208 |
1.0000
| 0.0300 | 0.4330* | −0.0062 | 0.2699* | 0.0045 |
IFRS
it
| 0.2450* | 0.1599* | −0.1939* | −0.0415 | 0.2266* | 0.1792* | 0.0565 |
1.0000
| −0.0059 | 0.1113* | 0.0127 | 0.0336 |
IND_GROWTH
it
| 0.0052 | −0.0260 | −0.0053 | 0.0190 | −0.0144 | −0.0032 | 0.3176* | 0.0000 |
1.0000
| −0.0494 | 0.2029* | −0.0202 |
LEV
it
| −0.1014 | −0.0018 | −0.0603 | −0.0145 | 0.1983* | −0.0989 | 0.0126 | 0.1105* | −0.0305 |
1.0000
| −0.3729* | −0.0209 |
NI
it
| 0.0410 | −0.0198 | −0.0968 | 0.3145* | −0.1130* | 0.1399* | 0.1829* | −0.0447 | 0.1426* | −0.3421* |
1.0000
| −0.0416 |
SIZE
it
| −0.0614 | 0.3031* | 0.2464* | −0.0308 | 0.0113 | −0.0417 | −0.0144 | 0.0107 | −0.0067 | −0.0104 | −0.0147 |
1.0000
|
Full sample | Industry/size-matched sample | PSM sample | Mismatched sample | |||||
---|---|---|---|---|---|---|---|---|
SIC1
it
| Abs. (IFRS) | Rel. (IFRS) | Abs. (IFRS) | Rel. (IFRS) | Abs. (IFRS) | Rel. (IFRS) | Abs. (IFRS) | Rel. (IFRS) |
0 | 24 (0) | 0.31 % (0 %) | 0 (0) | 0 % (0 %) | 0 (0) | 0 % (0 %) | 0 (0) | 0 % (0 %) |
1 | 232 (17) | 2.95 % (2.59 %) | 32 (16) | 2.96 % (2.96 %) | 22 (10) | 2.10 % (1.90 %) | 0 (0) | 0 % (0 %) |
2 | 927 (88) | 11.80 % (13.41 %) | 136 (68) | 12.57 % (12.57 %) | 146 (72) | 13.90 % (13.71 %) | 159 (78) | 17.87 % (17.53 %) |
3 | 1,593 (183) | 20.27 % (27.90 %) | 236 (118) | 21.81 % (21.81 %) | 289 (146) | 27.52 % (27.81 %) | 286 (155) | 32.13 % (34.83 %) |
4 | 1,175 (46) | 14.95 % (7.01 %) | 90 (45) | 8.32 % (8.32 %) | 88 (43) | 8.38 % (8.19 %) | 0 (0) | 0 % (0 %) |
5 | 1,291 (108) | 16.43 % (16.46 %) | 180 (90) | 16.64 % (16.64 %) | 165 (83) | 15.71 % (15.81 %) | 0 (0) | 0 % (0 %) |
7 | 1,427 (157) | 18.16 % (23.93 %) | 304 (152) | 28.10 % (28.10 %) | 235 (116) | 22.38 % (22.10 %) | 289 (156) | 32.47 % (35.06 %) |
8 | 1,114 (56) | 14.18 % (8.54 %) | 104 (52) | 9.61 % (9.61 %) | 104 (54) | 9.90 % (10.29 %) | 156 (56) | 17.53 % (12.58 %) |
9 | 74 (1) | 0.94 % (0.15 %) | 0 (0) | 0 % (0 %) | 1 (1) | 0.10 % (0.19 %) | 0 (0) | 0 % (0 %) |
TOTAL | 7,857 (656) | 100 % (100 %) | 1,082 (541) | 100 % (100 %) | 1,050 (525) | 100 % (100 %) | 890 (445) | 100 % (100 %) |
5.2 Accounting System Comparability Results
Years included | Obs. | Prediction | Mean | Median | Std. Dev. | |
---|---|---|---|---|---|---|
Panel 1: Pre-BilMoG period includes all years from 2003–2009 (Model 1)
| ||||||
Before BilMoG | 2003–2009 | 379 | 0.0812 | 0.0812 | 0.0053 | |
After BilMoG | 2010–2011 | 162 | 0.0042 | 0.0036 | 0.0027 | |
After minus before | 2003–2011 | 541 | Neg. |
−0.0770***
|
−0.0776***
|
−0.0026**
|
Panel 2: All years but the year 2009 (crisis year) in pre-BilMoG period (Model 2)
| ||||||
Before BilMoG | 2003–2008 | 266 | 0.0860 | 0.0863 | 0.0066 | |
After BilMoG | 2010–2011 | 162 | 0.0042 | 0.0036 | 0.0027 | |
After minus before | 2003–2011, not 2009 | 428 | Neg. |
−0.0818***
|
−0.0827***
|
−0.0039**
|
Panel 3: Year-fixed effects in regressions (Model 3)
| ||||||
Before BilMoG | 2003–2009 | 379 | 0.1353 | 0.1353 | 0.0069 | |
After BilMoG | 2010–2011 | 162 | 0.0042 | 0.0034 | 0.0029 | |
After minus before | 2003–2011 | 541 | Neg. |
−0.1311***
|
−0.1319***
|
−0.0040*
|
Panel 4: Growth controls in regressions (Model 4)
| ||||||
Before BilMoG | 2003–2009 | 372 | 0.0810 | 0.0811 | 0.0081 | |
After BilMoG | 2010–2011 | 158 | 0.0346 | 0.0347 | 0.0035 | |
After minus before | 2003–2011 | 530 | Neg. |
−0.0464***
|
−0.0464***
|
−0.0046***
|
6 Robustness Analyses
6.1 Value Relevance Comparability
Prediction |
Model 1
|
Model 2
|
Model 3
|
Model 4
| |
---|---|---|---|---|---|
HGB firms, pre | 0.0598 | 0.0639 | 0.0596 | 0.043 | |
IFRS firms, pre | 0.1343 | 0.1475 | 0.1499 | 0.1336 | |
HGB firms – IFRS firms, pre | −0.0745* | −0.0836* | −0.0903** | −0.0906** | |
HGB firms, post | 0.0793 | 0.0793 | 0.0816 | 0.062 | |
IFRS firms, post | 0.0974 | 0.0974 | 0.0968 | 0.131 | |
HGB firms – IFRS firms, post | −0.0181 | −0.0181 | −0.0152 | −0.0690 | |
Post – pre, change in abs diff | Neg. |
−0.0564*
|
−0.0655*
|
−0.0750**
|
−0.0216
|
Model information:
| Firm pairs: | 541 | 428 | 541 | 530 |
Pre-BilMoG period: | 2003–2009 | 2003–2008 | 2003–2009 | 2003–2009 | |
Post-BilMoG period: | 2010–2011 | 2010–2011 | 2010–2011 | 2010–2011 |
6.2 Different (Mis-)Matched Samples
Panel 1: Pre-BilMoG period includes all years from 2003–2009 (Model 1)
| |||
Accounting Syst. Comp. (after – before) | Industry/size | PSM | Mismatched |
Mean
| −0.0770*** | −0.0766*** | 0.0043*** |
Median
| −0.0776*** | −0.0765*** | 0.0032*** |
Std. Dev.
| −0.0026** | 0.0000 | 0.0044*** |
Value Relevance Comp. (after – before) | −0.0564* | 0.0044 | 0.0561 |
Panel 2: All years but the year 2009 (crisis year) in pre-BilMoG period (Model 2)
| |||
Accounting Syst. Comp. (after – before) | Industry/size | PSM | Mismatched |
Mean
| −0.0818*** | −0.1071*** | 0.0165*** |
Median
| −0.0827*** | −0.1071*** | 0.0155*** |
Std. Dev.
| −0.0039** | −0.0001 | 0.0031*** |
Value Relevance Comp. (after – before) | −0.0655* | 0.0018 | 0.0509 |
Panel 3: Year-fixed effects in regressions (Model 3)
| |||
Accounting Syst. Comp. (after – before) | Industry/size | PSM | Mismatched |
Mean
| −0.1311*** | −0.0614*** | −0.0722*** |
Median
| −0.1319*** | −0.0613*** | −0.0733*** |
Std. Dev.
| −0.0040* | 0.0004 | 0.0034** |
Value Relevance Comp. (after – before) | −0.0750** | 0.0045 | 0.0475 |
Panel 4: Growth controls in regressions (Model 4)
| |||
Accounting Syst. Comp. (after – before) | Industry/size | PSM | Mismatched |
Mean
| −0.0464*** | −0.0243*** | 0.0043*** |
Median
| −0.0464*** | −0.0245*** | 0.0035*** |
Std. Dev.
| −0.0046*** | 0.0010** | 0.0023*** |
Value Relevance Comp. (after – before) | −0.0216 | 0.0088 | 0.0278 |
6.3 Sample Split Based on the BIG5 Auditor Classification
Years included | Obs. | Prediction | Mean | Median | Std. Dev. | |
---|---|---|---|---|---|---|
Panel 1: Models 1 & 2 (combined presentation since both have the same post-BilMoG period)
| ||||||
Audited by a BIG5 audit firm | 2010–2011 | 86 | 0.0038 | 0.0035 | 0.0023 | |
Not audited by a BIG5 audit firm | 2010–2011 | 76 | 0.0047 | 0.0042 | 0.0030 | |
No BIG5 minus BIG5 | 2010–2011 | 162 | Pos. |
0.0009** |
0.0007* |
0.0008** |
Panel 2: Year-fixed effects in regressions (Model 3)
| ||||||
Audited by a BIG5 audit firm | 2010–2011 | 86 | 0.0037 | 0.0029 | 0.0027 | |
Not audited by a BIG5 audit firm | 2010–2011 | 76 | 0.0047 | 0.0043 | 0.0030 | |
No BIG5 minus BIG5 | 2010–2011 | 162 | Pos. |
0.0010**
|
0.0014**
|
0.0004
|
Panel 3: Growth controls in regressions (Model 4)
| ||||||
Audited by a BIG5 audit firm | 2010–2011 | 83 | 0.0344 | 0.0345 | 0.0032 | |
Not audited by a BIG5 audit firm | 2010–2011 | 75 | 0.0349 | 0.0347 | 0.0038 | |
No BIG5 minus BIG5 | 2010–2011 | 158 | Pos. |
0.0006
|
0.0003
|
0.0006*
|