Publication Type
Journal Article
Version
submittedVersion
Publication Date
3-2025
Abstract
We examine how common institutional investors (CIIs) facilitate the financial reporting comparability (FRC) of US firms. Common ownership increases FRC of firms that are directly owned by CIIs (via a direct effect) and has positive spillover effects on other firms in the same industry. We find spillover effects in two types of firms: (1) those that are commonly owned by different institutional investors but are connected through common firms, and (2) those that do not have any common ownership. These results suggest that the effect of common ownership goes beyond commonly owned firms and extends to non-commonly owned firms. Furthermore, we find two mechanisms for the direct and spillover effects of common ownership on reporting comparability: firms' hiring of common auditors and their adoption of similar accounting practices. Overall, we provide comprehensive evidence on how common institutional ownership benefits the comparability of financial reporting in the United States.
Keywords
blockholders, common ownership, cross ownership, financial reporting comparability, institutional investors, spillover effects
Discipline
Accounting | Finance and Financial Management
Research Areas
Corporate Reporting and Disclosure
Publication
Contemporary Accounting Research
First Page
1
Last Page
36
ISSN
0823-9150
Identifier
10.1111/1911-3846.13028
Publisher
Wiley
Embargo Period
4-6-2025
Citation
LI, Xuanbo; LOU, Yun; WANG, Rencheng; and ZHOU, Kaitang.
How do institutional investors facilitate reporting comparability? Evidence from common institutional ownership in the United States. (2025). Contemporary Accounting Research. 1-36.
Available at: https://ink.library.smu.edu.sg/soa_research/2080
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1111/1911-3846.13028
