Earnings quality among private firms: evidence from the ELITE context
Abstract
Purpose
Recent accounting literature claims that private firms’ heterogeneity influences the quality of earnings. Along with certain drivers of heterogeneity, private firms get involved in specific programs aimed at fostering their access to capital, competencies and networks (CCN programs). Such programs can enhance private firms’ exposure to stakeholders that demand higher reporting quality, affecting their financial reporting choices. Therefore, this study investigated whether membership in CCN programs affects private firms’ earnings quality.
Design/methodology/approach
Focusing on the ELITE program, an international platform that since 2012 aims to support the growth of the most promising SMEs, and employing different econometric specifications facing endogeneity concerns, this paper carries out a quantitative empirical analysis to test the effect of CCN programs on private firms’ earnings quality.
Findings
Employing different earnings quality measures, empirical evidence reveals that firms belonging to CCN programs experienced an improvement in their earnings quality.
Research limitations/implications
Even though endogeneity concerns have been addressed, we are nevertheless aware that they might, at least partially, have affected our results.
Practical implications
Although the contributions of the study are mostly academic, the empirical evidence obtained also carries practical implications. CCN programs not only act, as one might assume, as catalysts for economic and dimensional growth but also contribute to better earnings quality, mitigating the information asymmetries between firms and their stakeholders.
Originality/value
By adding new evidence to the literature concerning the impact of private firms’ heterogeneity on earnings quality, this is the first study to analyze the impact of specific programs aimed at supporting the affiliated SMEs to foster their access to capital, competencies and networks.
Keywords
Acknowledgements
We are grateful to the editors and reviewers whose many invaluable comments and suggestions considerably sharpened the exposition and improved the substance of the paper. We also extend our thanks to the participants of the 47th EAA Annual Congress, the 10th JIAR International Conference, the 3rd Workshop SIDREA Group at the University of Padova and the 13th Financial Reporting Workshop at the University of Firenze.
Citation
Ricciardi, G., Fera, P., Moscariello, N. and De Nuccio, E. (2024), "Earnings quality among private firms: evidence from the ELITE context", Journal of Applied Accounting Research, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JAAR-09-2023-0276
Publisher
:Emerald Publishing Limited
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