Accounting Comparability and Labor Productivity: Evidence from China’s A-Share Listed Firms

Abstract

Abstract This study examines the impact of accounting comparability on firms’ labor productivity. Using a panel data of China’s A-share listed firms from 2011 to 2022, we find that accounting comparability is positively related to firms’ labor productivity, and with every one-unit increase in the level of accounting comparability, the firms’ labor productivity is expected to increase by 2.97 units. In the mechanism analysis, we find that promoting human capital accumulation and reducing agency cost are crucial channels through which accounting comparability improves firms’ labor productivity. In additional analysis, we find that the positive effect of accounting comparability on labor productivity is more pronounced when firms have higher financing constraints and lower levels of corporate governance, and their peer firms have stronger accounting information quality. Our findings add to the body of knowledge regarding the determinants of labor productivity, and the labor-economic consequences of accounting comparability, and provide firms with evidence-based insights into improving their labor productivity.