Accounting comparability and corporate innovative efficiency

Justin Chircop, Daniel W. Collins, Lars Helge Hass, Nhat (Nate) Q. Nguyen

Research output: Contribution to journalArticlepeer-review

16 Citations (Scopus)
406 Downloads (Pure)


We predict that a firm's greater accounting comparability with its industry peers facilitates its learning from those peer firms' research and development (R&D) investments, allowing that firm to have greater innovative efficiency. We estimate accounting comparability using pro forma capitalized R&D earnings that link lagged R&D expenditures to future profitability employing the Almon (1965) distributed lag model. We find that greater accounting comparability leads to enhanced ability to predict future cash flows generated by R&D investments of peer firms. In the cross-section, we observe that the relation between accounting comparability and innovative efficiency is stronger if peer firms exhibit higher accounting (accrual) quality and are themselves successful innovators. In sum, this study shows that a shared qualitative characteristic of accounting, namely, accounting comparability, is positively associated with innovative efficiency.

Original languageEnglish
Pages (from-to)127-151
Number of pages25
JournalThe Accounting Review
Issue number4
Early online date13 Oct 2019
Publication statusPublished - 1 Jul 2020


  • accounting comparability
  • innovative efficiency
  • product similarity
  • product market competition


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