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Government Procurement and Financial Reporting Quality

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Date Issued:
2020
Abstract/Description:
Government spending is essential for the US economy, and the amount of capital that flows from the government to US firms has increased substantially in recent years. Despite the economic importance of the corporate-government contracting relationship, we know little about the firm-level financial outcomes associated with government contracts. In this study, I investigate whether the corporate government contracting relationship affects firm-level financial reporting quality. Using a sample of 58,988 US publicly-traded firms from 2001 through 2017, I find that federal government contracting firms are associated with a lower level of discretionary accruals, lower probability of internal control material weaknesses, and lower probability of restatement and fraud as compared to non government contractors. However, this association is weaker when industry competition on government contracts are lower, and government switching costs in which the cost to find new suppliers are higher. Collectively, my empirical results suggest that having the government as a customer has a positive impact on the quality of financial reports.
Title: Government Procurement and Financial Reporting Quality.
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Name(s): He, Zhijian Chris, author
Kohlbeck, Mark, Thesis advisor
Florida Atlantic University, Degree grantor
School of Accounting
College of Business
Type of Resource: text
Genre: Electronic Thesis Or Dissertation
Date Created: 2020
Date Issued: 2020
Publisher: Florida Atlantic University
Place of Publication: Boca Raton, Fla.
Physical Form: application/pdf
Extent: 125 p.
Language(s): English
Abstract/Description: Government spending is essential for the US economy, and the amount of capital that flows from the government to US firms has increased substantially in recent years. Despite the economic importance of the corporate-government contracting relationship, we know little about the firm-level financial outcomes associated with government contracts. In this study, I investigate whether the corporate government contracting relationship affects firm-level financial reporting quality. Using a sample of 58,988 US publicly-traded firms from 2001 through 2017, I find that federal government contracting firms are associated with a lower level of discretionary accruals, lower probability of internal control material weaknesses, and lower probability of restatement and fraud as compared to non government contractors. However, this association is weaker when industry competition on government contracts are lower, and government switching costs in which the cost to find new suppliers are higher. Collectively, my empirical results suggest that having the government as a customer has a positive impact on the quality of financial reports.
Identifier: FA00013438 (IID)
Degree granted: Dissertation (Ph.D.)--Florida Atlantic University, 2020.
Collection: FAU Electronic Theses and Dissertations Collection
Note(s): Includes bibliography.
Subject(s): Government purchasing
Financial statements
Government contractors
Held by: Florida Atlantic University Libraries
Sublocation: Digital Library
Persistent Link to This Record: http://purl.flvc.org/fau/fd/FA00013438
Use and Reproduction: Copyright © is held by the author with permission granted to Florida Atlantic University to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.
Use and Reproduction: http://rightsstatements.org/vocab/InC/1.0/
Host Institution: FAU
Is Part of Series: Florida Atlantic University Digital Library Collections.