Do Firms Mimic Industry Leaders’ Accounting? Evidence from Financial Statement Comparability

ABSTRACT Following management theory on organizational legitimacy, we predict that managers mimic the accounting of industry-leading companies to gain legitimacy. Such demand for legitimacy is expected be greater new because stakeholders are more uncertain about managers’ ability. Using a sample CEO turnovers, find firm increases financial statement comparability with industry leaders after assumes office. This relation stronger when (1) lack executive experience at larger firms, younger, or belong an underrepresented group (i.e., female nonwhite); (2) networks facilitate imitation intense, such as firms and peers located in same metropolitan statistical area (MSA) they share auditors blockholders; (3) firms’ operating environments volatile. These findings support idea CEOs’ leads comparable accounting. Data Availability: available from public sources cited text.