Did the Securities Exchange Act of 1934 Increase Accounting Comparability

We examine whether the Securities and Exchange Act of 1934 increased earnings informativeness by increasing accounting comparability, consistent with regulators’ intent. Specifically, we document that the Act made the accounting of similar firms (i.e., firms in the same industry) and differing firms (i.e., firms in different industries) look more similar. However, inconsistent with the Act simply imposing uniformity, we find that the increase in similarity is stronger when firms are similar than when firms differ. Further, consistent with increased comparability leading to increased information transfers among firms, we document that the Act increased information spillovers from earnings news released during bellwether firms’ earnings announcements to other firms within the same industry. Lastly, we find that the Act increased earnings informativeness only for firms that experienced larger increases in comparability.