סמינר במימון חשבונאות

Corporate In-house Human Capital Investment in Accounting

Joint work with Qiang Cheng (Singapore Management University), Travis Chow (University of Hong Kong), and Yanju Liu (Singapore Management University).

Abstract: In this study, we provide large-sample evidence on how corporate in-house human capital investments in accounting affect earnings management. We construct a dataset of more than 411,000 individual-years of in-house accountants between 2009 and 2015 and measure a firm’s accounting human capital based on the proportion of in-house accountants with Big N work experience and a CPA designation. We find that firms with higher accounting human capital have a lower probability of accounting irregularities, lower discretionary accruals, better internal control, and fewer unintentional accounting errors. The results hold when we control for potential endogeneity by using the staggered adoption of the CPA mobility law and the number of top accounting undergraduate programs as instrumental variables for accounting human capital. We further find that firms with higher accounting human capital exhibit stronger market reactions to earnings news and lower audit fees, suggesting that external stakeholders perceive these firms as having better financial reporting quality.

For details: racheltahar@tauex.tau.ac.il