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Alessandro Minichilli; Annalisa Prencipe; Suresh Radhakrishnan; Gianfranco Siciliano

We examine the association between eponymy (i.e., naming a firm after the founder) and financial reporting quality (FRQ). Using a proprietary dataset of 2,271 large Italian private firms, we first document that eponymy is positively associated with total accrual quality, working capital accrual quality, revenue accrual quality, and a composite index of the three measures. Second, we find that, even though eponymy is negatively associated with rarer names, the relation between FRQ and eponymy is more pronounced for eponymous firms that have rarer names. This finding is consistent with the argument that name rarity increases the reputation cost of eponymy. Corroborating these findings, we also find that the eponymy-FRQ relation is stronger for firms that operate only locally and weaker for firms that operate in manufacturing-oriented businesses. Finally, we document that eponymous firms are associated with a lower cost of debt, both directly and indirectly, through their higher FRQ. Collectively, these findings suggest that reputation concerns act as a disciplining mechanism for FRQ in private firms.