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Why do firms change fiscal year-end?

archives@tulane.edu / Changing fiscal year-end (FYE) unequivocally impacts time-series consistency, yet firms appear to be willing to change it. Enhanced comparability with industry peers appears to be a significant driver of this change. Aligning FYE with industry peers is associated with an improved information environment as proxied by a significant increase in analyst coverage, the number of forecasts per analyst, and institutional ownership. Additionally, loss-making firms also appear more likely to switch FYEs, ostensibly to dump losses in the less-than-12-month stub period created by the transition. Examining changes to and from December separately, I find that small firms are more likely to move to a non- December FYE, suggesting that accounting costs such as audit fees are a consideration in changing FYE. On average, the market reacts significantly to the FYE change disclosure. / 1 / Zhiwei Zhu

  1. tulane:122083
Identiferoai:union.ndltd.org:TULANE/oai:http://digitallibrary.tulane.edu/:tulane_122083
Date January 2021
ContributorsZhu, Zhiwei (author), De Franco, Gus (Thesis advisor), A.B. Freeman School of Business Accounting (Degree granting institution)
PublisherTulane University
Source SetsTulane University
LanguageEnglish
Detected LanguageEnglish
TypeText
Formatelectronic, pages:  66
RightsNo embargo, Copyright is in accordance with U.S. Copyright law.

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