Investigating the effect of accounting comparability on labor investment efficiency: Moderating role of financing constraint, internal and external oversight

Abstract

Objective: One of the most important decisions of companies which have important economic consequences in the long run, both for the country and company, is decisions related to efficiency of investment in labor. Accordingly, in this study, the role of one of the key features of accounting information quality (accounting comparability) on labor investment efficiency in companies was investigated. In the meantime, the moderating role of features including financing constraint, internal and external oversight studied. Method: For statistical analysis, data from 91 firms listed on Tehran Stock Exchange from 2010 to 2020 was used. Results: The results of regression analysis of the study showed that accounting comparability has positive effects on the labor investment efficiency. Evidence also shows that when firms have financing constraint, and weak internal and external oversight a stronger positive relationship between accounting comparability and labor investment efficiency exists. Conclusion: Standard setters can improve the efficiency of investing in labor by adopting ways to improve the comparability of companies' information. Also, in situations where internal and external oversight are not in a good position, the labor investment efficiency can be improved by providing comparable accounting information. Objective: One of the most important decisions of companies which have important economic consequences in the long run, both for the country and company, is decisions related to efficiency of investment in labor. Accordingly, in this study, the role of one of the key features of accounting information quality (accounting comparability) on labor investment efficiency in companies was investigated. In the meantime, the moderating role of features including financing constraint, internal and external oversight studied. Method: For statistical analysis, data from 91 firms listed on Tehran Stock Exchange from 2010 to 2020 was used. Results: The results of regression analysis of the study showed that accounting comparability has positive effects on the labor investment efficiency. Evidence also shows that when firms have financing constraint, and weak internal and external oversight a stronger positive relationship between accounting comparability and labor investment efficiency exists. Conclusion: Standard setters can improve the efficiency of investing in labor by adopting ways to improve the comparability of companies' information. Also, in situations where internal and external oversight are not in a good position, the labor investment efficiency can be improved by providing comparable accounting information.