Information versus Investment

• 成果类型: Article
• 署名作者: Terry, Stephen J.; Whited, Toni M.; Zakolyukina, Anastasia A.
• 署名单位: Boston University; National Bureau of Economic Research; University of Michigan System; University of Michigan; University of Chicago
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhac052
• 发表日期: 2023
• 页码: 1148
• 关键词: earnings management; real; COMPENSATION; incentives; tests; MODEL

摘要

We quantify the real implications of trade-offs between firm information disclosure and long-term investment efficiency. We estimate a dynamic equilibrium model in which firm managers confront realistic incentives to misreport earnings and distort their real investment choices. The model implies a socially optimal level of disclosure regulation that exceeds the estimated value. Counterfactual analysis reveals that eliminating earnings misreporting completely through disclosure regulation incentivizes managers to distort real investment. Lower earnings informativeness raises the cost of capital, which results in a 5.7% drop in average firm value, but more modest effects on social welfare and aggregate growth.