Do Larger Reporting Networks Yield Benefits from Information Network Effects?
Brown, Anna Bergman, Byard, Donal, Darrough, Masako, Suh, Jangwon, Wang, Yakun
The Accounting Review · 2026 · Volume 101 · Issue 1
Abstract
This study explores whether an increase in the size of firms’ reporting networks (the number of industry peer firms reporting in comparable standards) improves the quality of analysts’ information environments. We exploit the effect of the 2005 mandatory adoption of IFRS around the worldon U.S. firms, as IFRS adoption did not directly affect U.S. firms but increased the size of their reporting networks. We document that mandatory IFRS adoption is associated with a significantly larger improvement in the quality of analysts’ information environment for U.S. firms with relatively few domestic industry peers than for other U.S. firms. Further, we show that there is a larger increase in the frequency with which analysts’ research reports for U.S. firms with few domestic peers mention IFRS-adopting EU industry peer firms. Our results provide evidence that mandatory reporting regulations that increase reporting comparability can result in positive information externalities from information network effects. JEL Classifications:K22; M41; M48.
Keywords
information network effects, positive information externalities, financial reporting comparability
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