Invest in Private Companies: Their Accounts Are More Reliable
Institutional investors tend to put their money largely in public companies, persuaded that market discipline makes their accounts more reliable than those of private ones. But a new study with Massimiliano Bonacchi and Paul Zarowin finds that, if you compare public and private companies with a similar organizational structure, private firms display a higher accounting quality.
Institutional investors tend to put their money largely in public companies, persuaded that market discipline makes their accounts more reliable than those of private ones. But a new study with Massimiliano Bonacchi and Paul Zarowin finds that, if you compare public and private companies with a similar organizational structure, private firms display a higher accounting quality.