Shared continuing professional development courses and financial statement comparability

Abstract

Although the benefits of financial statement comparability have been studied extensively, less is known about its determinants. This study examines how accounting education during the continuing professional development (CPD) stage helps improve comparability by leveraging the unique arrangement of CPD activities for non-practising certified public accountants (CPAs) in China. We argue that CPAs who attend the same CPD courses acquire similar interpretations and practising modes of accounting standards, which then systematically influence their practices. The empirical results show that two firms headquartered in provinces that employ the same CPD course supplier exhibit higher accounting comparability. Furthermore, this effect is stronger when the two firms have more CPAs in top management teams and/or have experienced the same education for a greater number of years. Finally, we consider the staggered adoption of CAS 14 (an equivalent of IFRS 15), during which initial professional development had a limited role, and find that firms that switched to the new standard provide accounting information that is more comparable if they share the same course supplier. Our findings shed light on the role of continuing accounting education in shaping accounting practices and deepen our understanding of how accounting comparability is achieved.