Financial Reporting Quality and Peer Group Composition

摘要: Firms often compose peer groups to benchmark the compensation package of CEO and/or performance firm as part a relative evaluation. When justifying composition group, firms claim that are similar with respect accounting-based and market-based measures. An implicit assumption in this argument is accounting numbers potential accurate. In study, we examine relationship between financial reporting quality probability being included group another firm. We hypothesize weaker less likely be because increased information asymmetry selecting contagious effects weak quality. Based on data about S&P 900 from 2006 until 2011, document are, after controlling for known determinants composition, used Additional tests suggest effect driven by developed our theory.