The relationship between the income statement presentation format and company characteristics: An exploratory study on the comparability of the financial statement presentation format.

摘要

In this study, the relationship between the comparability and the presentation format of financial statements is addressed. Specifically, whether a company's selection of income statement presentation format is associated with the company's characteristics is explored to examine if the selection of financial statement presentation format is disclosure relevant. This study takes advantage of a unique data set that is constructed by a proprietary information extraction system that extracts the presentation, format patterns of original income statements in the 10-K EDGAR filings. This type of data is not available from other databases such as COMPUSTAT. By utilizing a document tree model and sophisticated pattern matching techniques, this system is designed to take advantage of the rich contents of the EDGAR database even though the current implementation is concentrated on the extraction of income statement structure and contents.; This study employs the classification of income statement presentation formats used by AICPA as dependent variables while the 2-digit SIC code as well as 32 commonly used financial ratios are used as predictors. Logistic regression and the Classification and Regression Tree technique are used to test the models. The results support our hypotheses and thus serve as the evidences of the association between a company's choice of income statement format and the company's industry and several accounting characteristics ascribed to financial ratios. The results also confirm that the SIC code serves as a good proxy for industry-wide characteristics. The findings suggest that the flexibility in selecting financial statement presentation formats allows companies to better disclose their industry-wide and company-specific characteristics and thus facilitates better disclosure. The findings also imply that such flexibility should not be overlooked in the design of protocols and standards for computer-oriented accounting data transmission and process such as the XBRL taxonomies.