The purpose of this paper is to investigate whether the firms with the same Big Four audit firm and from the same legal system disclose more comparable non-GAAP measures. Using 23,436 pairs of European firms, we hand-collected information on the non-GAAP measures disclosed in the statement of comprehensive income. The results showed that the firms with the same Big Four audit firm or from the same legal system are positively and significantly associated with non-GAAP comparability. Our work adds to the studies on accounting comparability. Furthermore, it provides fresh insights that support the latest IASB activity on the Primary Financial Statement project, under which the standard setter has endorsed ED/2019/7 General Presentation and Disclosures.
Keywords: financial statement comparability, Big Four audit firms, legal system, non-GAAP measures, IAS 1
Macchioni R., Allini A., Prisco M. (2022). The role of the Big Four audit firms and the legal system in non-GAAP comparability, Financial Reporting, 1, pp. 79-116. Doi: 10.3280/FR2022-001003
