Value relevance of the order and proximity of financial statements
| All firms | ISBS = 1 | ISBS = 0 | After exclusions | |
|---|---|---|---|---|
| Variable | p | p | p | p |
| Panel A: Order of IS and BS | ||||
| BPS | 1.803*** (<0.001) | 2.350*** (<0.001) | 1.375** (0.040) | 1.849*** (0.001) |
| EPS | 6.689*** (<0.001) | 2.115* (0.073) | 7.998*** (<0.001) | 6.756*** (<0.001) |
| ISBS | −0.264 (0.967) | −7.514 (0.191) | ||
| ISBS × BPS | 0.353 (0.211) | 0.465 (0.238) | ||
| ISBS × EPS | −4.138** (0.022) | −4.506** (0.027) | ||
| Neg | 22.727*** (0.001) | 15.416** (0.017) | 6.076* (0.055) | |
| Neg × BPS | −0.390 (0.247) | −0.572 (0.234) | 0.094 (0.690) | |
| Neg × EPS | −2.503* (0.081) | −1.359 (0.359) | −8.122*** (0.001) | |
| Neg × ISBS | −12.993* (0.086) | |||
| Fixed effects | ||||
| Year | Yes | Yes | Yes | Yes |
| Firm | Yes | Yes | Yes | Yes |
| N | 1873 | 1185 | 688 | 1090 |
| Within R2 | 61.8% | 66.2% | 38.9% | 66.0% |
| Panel B: Proximity of IS and BS | ||||
| All firms | ISBSdis = 1 | ISBSdis = 0 | After exclusions | |
| Variable | p | p | p | p |
| BPS | 2.771*** (<0.001) | 0.276 (0.358) | 3.073*** (<0.001) | 2.861*** (<0.001) |
| EPS | 1.137 (0.250) | 6.760*** (<0.001) | 0.698 (0.598) | 0.963 (0.360) |
| ISBSdis | 28.154** (0.011) | 41.645*** (0.003) | ||
| ISBSdis × BPS | −1.947*** (<0.001) | −2.374*** (<0.001) | ||
| ISBSdis × EPS | 5.308*** (0.004) | 5.469*** (0.008) | ||
| Neg | −5.416 (0.692) | 4.515 (0.249) | 9.302 (0.652) | |
| Neg × BPS | −0.051 (0.842) | 0.118 (0.653) | −0.407 (0.398) | |
| Neg × EPS | −5.173*** (0.003) | −5.200*** (0.004) | −7.041 (0.187) | |
| Neg × ISBSdis | 13.681 (0.345) | |||
| Fixed effects | ||||
| Year | Yes | Yes | Yes | Yes |
| Firm | Yes | Yes | Yes | Yes |
| N | 1873 | 1702 | 171 | 1090 |
| Within R2 | 66.1% | 34.8% | 80.3% | 71.4% |
| Panel C: Proximity of IS and CF | ||||
| All firms | ISCFdis = 1 | ISCFdis = 0 | After exclusions | |
| Variable | p | p | p | p |
| BPS | 2.853*** (<0.001) | 0.453 (0.559) | 2.906*** (<0.001) | 3.090*** (<0.001) |
| CPS | 0.232 (0.893) | 16.996*** (<0.001) | −0.273 (0.878) | 0.171 (0.934) |
| ACCPS | 3.628** (0.021) | 13.259*** (<0.001) | 4.099** (0.013) | 7.203*** (0.001) |
| ISCFdis | 3.019 (0.596) | 10.094* (0.088) | ||
| ISCFdis × BPS | −1.624*** (0.002) | −1.797*** (0.002) | ||
| ISCFdis × CPS | 9.074*** (0.002) | 7.274** (0.024) | ||
| ISCFdis × ACCPS | 1.488 (0.578) | 1.298 (0.620) | ||
| Neg | 12.621** (0.028) | 9.717*** (0.003) | 13.537** (0.024) | |
| Neg × BPS | −1.247*** (<0.001) | −0.634 (0.250) | −1.348*** (<0.001) | |
| Neg × CPS | 2.421 (0.259) | −3.546 (0.709) | 3.399 (0.116) | |
| Neg × ACCPS | −2.648 (0.239) | −12.907*** (<0.001) | −1.146 (0.584) | |
| Neg × ISCFdis | 0.858 (0.899) | |||
| Fixed effects | ||||
| Year | Yes | Yes | Yes | Yes |
| Firm | Yes | Yes | Yes | Yes |
| N | 1873 | 298 | 1575 | 1090 |
| Within R2 | 60.3% | 83.5% | 61.1% | 65.1% |
| All firms | ISBS = 1 | ISBS = 0 | After exclusions | |
|---|---|---|---|---|
| Variable | ||||
| 1.803 | 2.350 | 1.375 | 1.849 | |
| 6.689 | 2.115 | 7.998 | 6.756 | |
| −0.264 (0.967) | −7.514 (0.191) | |||
| 0.353 (0.211) | 0.465 (0.238) | |||
| −4.138 | −4.506 | |||
| Neg | 22.727 | 15.416 | 6.076 | |
| Neg × | −0.390 (0.247) | −0.572 (0.234) | 0.094 (0.690) | |
| Neg × | −2.503 | −1.359 (0.359) | −8.122 | |
| Neg × | −12.993 | |||
| Year | Yes | Yes | Yes | Yes |
| Firm | Yes | Yes | Yes | Yes |
| 1873 | 1185 | 688 | 1090 | |
| Within | 61.8% | 66.2% | 38.9% | 66.0% |
| 2.771 | 0.276 (0.358) | 3.073 | 2.861 | |
| 1.137 (0.250) | 6.760 | 0.698 (0.598) | 0.963 (0.360) | |
| ISBSdis | 28.154 | 41.645 | ||
| ISBSdis × | −1.947 | −2.374 | ||
| ISBSdis × | 5.308 | 5.469 | ||
| Neg | −5.416 (0.692) | 4.515 (0.249) | 9.302 (0.652) | |
| Neg × | −0.051 (0.842) | 0.118 (0.653) | −0.407 (0.398) | |
| Neg × | −5.173 | −5.200 | −7.041 (0.187) | |
| Neg × ISBSdis | 13.681 (0.345) | |||
| Year | Yes | Yes | Yes | Yes |
| Firm | Yes | Yes | Yes | Yes |
| 1873 | 1702 | 171 | 1090 | |
| Within | 66.1% | 34.8% | 80.3% | 71.4% |
| Variable | ||||
| 2.853 | 0.453 (0.559) | 2.906 | 3.090 | |
| 0.232 (0.893) | 16.996 | −0.273 (0.878) | 0.171 (0.934) | |
| 3.628 | 13.259 | 4.099 | 7.203 | |
| ISCFdis | 3.019 (0.596) | 10.094 | ||
| ISCFdis × | −1.624 | −1.797 | ||
| ISCFdis × | 9.074 | 7.274 | ||
| ISCFdis × | 1.488 (0.578) | 1.298 (0.620) | ||
| Neg | 12.621 | 9.717 | 13.537 | |
| Neg × | −1.247 | −0.634 (0.250) | −1.348 | |
| Neg × | 2.421 (0.259) | −3.546 (0.709) | 3.399 (0.116) | |
| Neg × | −2.648 (0.239) | −12.907 | −1.146 (0.584) | |
| Neg × ISCFdis | 0.858 (0.899) | |||
| Fixed effects | ||||
| Year | Yes | Yes | Yes | Yes |
| Firm | Yes | Yes | Yes | Yes |
| 1873 | 298 | 1575 | 1090 | |
| Within | 60.3% | 83.5% | 61.1% | 65.1% |
Results are from ordinary least squares (OLS) estimation. Variables are defined in the Appendix. “After exclusions” refers to a sample which excludes all firm-years from the financial services sector, all firm-years from the real estate sector, and firm-years in other sectors where a loss was reported. Two-tailed p-values based on robust standard errors clustered by firm and year (Petersen, 2009; Cameron et al., 2011) are reported in brackets, with a correction where the covariance matrix is not positive semi-definite. ***, ** and * denote significance at the 1, 5 and 10% levels, respectively
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