The Effect of Changes in Regulation and Competition on Firms' Demand for Accounting Information

Posted: 2 Aug 2004

See all articles by Ranjani Krishnan

Ranjani Krishnan

Michigan State University - Department of Accounting & Information Systems

Abstract

This paper examines whether the type of competition in a market influences the association between the intensity of competition and demand for accounting information. Empirical analysis using a sample of 1,578 hospital-year observations from hospitals in California finds no association between the intensity of competition and demand for accounting information in the presence of quality competition; however, when firms compete on price, the need to control costs leads to a positive association between the two. In addition, the change in the unit of analysis in the hospital industry from the payer to the ailment increased the demand for accounting information for all California hospitals. This study suggests that competition intensity increases the demand for accounting information under one type of competition (price), but not another (quality competition), and thereby contributes to our understanding of the reasons for the mixed evidence in prior literature on the relation between competition and the demand for accounting information.

Keywords: Competition, managerial accounting, regulation

JEL Classification: M41, L11, I18

Suggested Citation

Krishnan, Ranjani, The Effect of Changes in Regulation and Competition on Firms' Demand for Accounting Information. Accounting Review, January 2005, Available at SSRN: https://ssrn.com/abstract=571704

Ranjani Krishnan (Contact Author)

Michigan State University - Department of Accounting & Information Systems ( email )

270 North Business Complex
East Lansing, MI 48824-1034
United States
517-353-4687 (Phone)
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