Portal de Periódicos da CAPES

RISK DIFFERENCES AND FINANCIAL REPORTING

1985; Wiley; Volume: 8; Issue: 4 Linguagem: Inglês

10.1111/j.1475-6803.1985.tb00417.x

1475-6803

William Beranek, Ronnie Clayton,

Auditing, Earnings Management, Governance

Abstract Financial leverage as reported by a consolidated financial statement may differ substantially from leverage for the parent company. To assess the financial risk for the parent (not the consolidated entity), employing consolidated data is hazardous; the problem is magnified by the fact that virtually all firms report only consolidated data. Consolidated leverage almost always equals or exceeds parent leverage for a wholly owned subsidiary, and many firms reporting only consolidated data have betas significantly greater than otherwise comparable firms that report both consolidated and parent company information.