Disclosure requirements and accounting comparability

Purpose This study aims to examine how disclosure requirements affect accounting comparability, using the introduction of the SEC rule to reduce mandatory disclosures for smaller reporting companies (SRCs) as the empirical setting. Design/methodology/approach The study uses a generalized difference-in-differences model with firm and year fixed effects. Findings SRCs have greater accounting comparability than benchmark firms. The effect of SRCs on accounting comparability is weaker for SRCs with greater product similarity and stronger for SRCs with more blockholders. The results indicate that accounting comparability increases as mandatory disclosure requirements are relaxed. Research limitations/implications This study highlights the SRC rule as a determinant of accounting comparability and demonstrates that mandatory disclosure simplification increases accounting comparability. Practical implications Strengthening and relaxing disclosure requirements may have asymmetric effects on levels of corporate disclosure. Regulators’ efforts to reduce disclosure burdens may increase accounting comparability among SRCs. Originality/value The study reveals the SRC rule as a key determinant of accounting comparability, linking mandatory disclosure simplification to improved comparability and expanding the literature on disclosure requirements and accounting properties.