AAA Spark Meeting of Regions

Organizational Ambidexterity and Financial Reporting Quality

• In Event: Strategy and Earnings Management

Abstract

This study examines the relationship between organizational ambidexterity and financial reporting quality. The study utilizes March’s (1991) organizational strategy typology to examine whether a firm’s business strategy affects its financial reporting quality. Prior literature shows that ambidextrous firms reduce agency costs, have better performance, lower business risk, and have a high ethical climate. The study hypothesizes that since these factors are linked with better financial reporting quality, ambidextrous firms will have higher financial reporting quality compared to non-ambidextrous firms. The study expects to find support for this theoretical prediction. The findings will introduce March’s (1991) organizational strategy typology into the accounting literature, support the use of text analysis in measuring business strategy, and have implications for practice by showing how strategic managerial decisions affect a firm’s accounting information.

Author

• Emmanuel Mwaungulu, University of Wisconsin - Whitewater