How does financial reporting quality relate to investment efficiency?

• 成果类型: Article
• 署名作者: Biddle, Gary C.; Hilary, Gilles; Verdi, Rodrigo S.
• 署名单位: University of Hong Kong; Hautes Etudes Commerciales (HEC) Paris; Massachusetts Institute of Technology (MIT)
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2009.09.001
• 发表日期: 2009
• 关键词: cash flow sensitivities; earnings management; AGENCY COSTS; disclosure; accruals; firm; performance; INFORMATION; equity; determinants

摘要

Prior evidence that higher-quality financial reporting improves capital investment efficiency leaves unaddressed whether it reduces over- or under-investment. This study provides evidence of both in documenting a conditional negative (positive) association between financial reporting quality and investment for firms operating in settings more prone to over-investment (under-investment). Firms with higher financial reporting quality also are found to deviate less from predicted investment levels and show less sensitivity to macro-economic conditions. These results suggest that one mechanism linking reporting quality and investment efficiency is a reduction of frictions such as moral hazard and adverse selection that hamper efficient investment. (C) 2009 Elsevier B.V. All rights reserved.