Too Relevant to Compare? The Implications of Increased Relevance for Comparability in Financial Reporting

Abstract The Conceptual Framework for Financial Reporting assumes that relevance and comparability generally move together, with only occasional trade-offs. This study empirically tests that assumption. We find that while relevance and comparability are positively associated below median levels of relevance, this relationship weakens and ultimately reverses as relevance reaches higher levels. These results suggest that trade-offs between the two attributes may be more frequent and systematic than the Framework implies. Our findings contribute to the literature by documenting a conditional relationship between two fundamental qualitative characteristics, challenging the notion that they are generally aligned. This highlights the need to better understand their interaction in practice. Future research could examine how this trade-off varies across firms and reporting environments, and how standard-setting might more effectively address such complexity.