Abstract

This study examines whether the introduction of industry-specific standards, introduced by the FASB between 1975 and 2011, is associated with greater capital flows to firms in affected industries. Employing a staggered difference-in-differences design, we predict and find an, on average, increase in firms’ capital growth in years following the introduction of the relevant industry accounting standard. We also find evidence that this finding is at least partly attributable to the introduction of such standards being associated with an increase in financial statement comparability and financial reporting transparency. Additional findings show that capital flows primarily to firms revealing stronger prospects (growth opportunities) after the introduction of industry-specific standards.