Accounting conservatism coefficient (ACkw) |
C_Score of the equation from Khan and Watts (2009Khan, M., & Watts, R. L. (2009). Estimation and empirical properties of a firm-year measure of accounting conservatism. Journal of Accounting and Economics, 48(2-3), 132-150.). |
Khan and Watts (2009Khan, M., & Watts, R. L. (2009). Estimation and empirical properties of a firm-year measure of accounting conservatism. Journal of Accounting and Economics, 48(2-3), 132-150.) |
Accounting conservatism coefficient (ACkwb) |
C_Score of the equation from Banker et al. (2016Banker, R. D., Basu, S., Byzalov, D., & Chen, J. Y. (2016). The confounding effect of cost stickiness on conservatism estimates. Journal of Accounting and Economics, 61(1), 203-220.) adapted to the methodology of Khan and Watts (2009Khan, M., & Watts, R. L. (2009). Estimation and empirical properties of a firm-year measure of accounting conservatism. Journal of Accounting and Economics, 48(2-3), 132-150.). |
Banker et al. (2016Banker, R. D., Basu, S., Byzalov, D., & Chen, J. Y. (2016). The confounding effect of cost stickiness on conservatism estimates. Journal of Accounting and Economics, 61(1), 203-220.) adapted to the methodology from Khan and Watts (2009Khan, M., & Watts, R. L. (2009). Estimation and empirical properties of a firm-year measure of accounting conservatism. Journal of Accounting and Economics, 48(2-3), 132-150.) |
Industrial complexity (IC) |
Herfindahl index, which measures the share of sales of each segment of the company in relation to the company’s total sales, which varies from 0 to 1. Coefficient close to 1 represents high complexity. |
Barinov et al. (2014Barinov, A., Park, S. S., & Yildizhan, C. (2014). Firm complexity and post-earnings-announcement drift. Retrieved from https://ssrn.com/abstract=2360338or http://dx.doi.org/10.2139/ssrn.2360338. https://ssrn.com/abstract=2360338...
) |
Business complexity (BC) |
Measured by the quantity of segments in which the company participates. |
Demirkan et al. (2012Demirkan, S., Radhakrishnan, S., & Urcan, O. (2012). Discretionary accruals quality, cost of capital, and diversification. Journal of Accounting, Auditing & Finance, 27(4), 496-526.), Barinov et al. (2014Barinov, A., Park, S. S., & Yildizhan, C. (2014). Firm complexity and post-earnings-announcement drift. Retrieved from https://ssrn.com/abstract=2360338or http://dx.doi.org/10.2139/ssrn.2360338. https://ssrn.com/abstract=2360338...
), Jennings and Tanlu (2014Jennings, J., & Tanlu, L. (2014). The effect of organizational complexity on earnings forecasting behavior. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2130119.
https://papers.ssrn.com/sol3/papers.cfm?...
) |
Number of subsidiaries (SUB) |
Number of subsidiaries of the company. |
Cetorelli and Goldberg (2014Cetorelli, N., & Goldberg, L. S. (2014). Measures of complexity of global banks. Economic Policy Review, 20(2), 1-39.) |
Years the company has operated (YO) |
Quanity of years the company has operated in the market. |
Doyle et al. (2007Doyle, J. T., Ge, W., & Mcvay, S. (2007). Accruals quality and internal control over financial reporting. The Accounting Review, 82(5), 1141-1170.), Boone et al. (2007Boone, A. L., Field, L. C., Karpoff, J. M., & Raheja, C. G. (2007). The determinants of corporate board size and composition: an empirical analysis. Journal of Financial Economics, 85(1), 66-101.), Farias (2012Farias, K. T. R. (2012). Mecanismos de controle do reporting financeiro das companhias abertas do Brasil (Doctoral Thesis). Accounting, Universidade de São Paulo, São Paulo.) |
Size of the company (SIZE) |
Natural logarithm of the company’s total assets. |
Doyle et al. (2007Doyle, J. T., Ge, W., & Mcvay, S. (2007). Accruals quality and internal control over financial reporting. The Accounting Review, 82(5), 1141-1170.), Farias (2012Farias, K. T. R. (2012). Mecanismos de controle do reporting financeiro das companhias abertas do Brasil (Doctoral Thesis). Accounting, Universidade de São Paulo, São Paulo.) |
Profitability (ROE) |
Return on equity. |
Doyle et al. (2007Doyle, J. T., Ge, W., & Mcvay, S. (2007). Accruals quality and internal control over financial reporting. The Accounting Review, 82(5), 1141-1170.), Farias (2012Farias, K. T. R. (2012). Mecanismos de controle do reporting financeiro das companhias abertas do Brasil (Doctoral Thesis). Accounting, Universidade de São Paulo, São Paulo.) |
Long term debts (LTD) |
Natural logarithm of the balance of long term debts. |
Bushman et al. (2004Bushman, R., Chen, Q., Engel, E., & Smith, A. (2004). Financial accounting information, organizational complexity and corporate governance systems.Journal of Accounting and Economics, 37(2), 167-201.), Farias (2012Farias, K. T. R. (2012). Mecanismos de controle do reporting financeiro das companhias abertas do Brasil (Doctoral Thesis). Accounting, Universidade de São Paulo, São Paulo.) |
Capital structure (CS) |
Ratio between total liabilities and net equity at the end of the period. |
Farias (2012Farias, K. T. R. (2012). Mecanismos de controle do reporting financeiro das companhias abertas do Brasil (Doctoral Thesis). Accounting, Universidade de São Paulo, São Paulo.) |
Total complexity (TC) |
Total complexity index created based on the information on industrial, business, and organizational complexity, which varies from 0 to 1, the closer to 1 meaning the greater the complexity. |
Created by the authors |