Corporate culture and financial statement comparability

In this paper, I empirically examine the influence of corporate culture on the comparability of financial statements. I predict that firms with strong corporate cultures have less-opportunistic managers, who make homogenous decisions
when faced with similar economic events, resulting in greater accounting
comparability. For a sample of U.S. companies, I find empirical evidence
consistent with this prediction: firms with strong corporate cultures have greater
peer- and industry-level comparability. These results are robust to using an
entropy-balanced sample, correcting for sample selection bias using Heckman’s
two-step procedure, and employing different measures of corporate culture
strength. Further analysis reveals that sudden CEO turnovers that move firms
towards (away from) a stronger corporate culture positively (negatively)
influence post-turnover accounting comparability. My results provide new
insights on the role of corporate culture for financial reporting.