Financial Reporting Quality and Investment Efficiency of Private Firms in Emerging Markets

2010 ◽  
Author(s):  
Feng Chen ◽  
Ole-Kristian Hope ◽  
Qingyuan Li ◽  
Xin Wang
Keyword(s):  
Emerging Markets ◽  
Financial Reporting ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Private Firms ◽  
Investment Efficiency

Financial Reporting Quality and Investment Efficiency of Private Firms in Emerging Markets

2011 ◽  
Vol 86 (4) ◽  
pp. 1255-1288 ◽  
Author(s):  
Feng Chen ◽  
Ole-Kristian Hope ◽  
Qingyuan Li ◽  
Xin Wang
Keyword(s):  
Emerging Markets ◽  
Financial Reporting ◽  
Public Information ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Private Firms ◽  
Investment Efficiency ◽  
Market Demand ◽  
Firm Level

ABSTRACT Prior research shows that financial reporting quality (FRQ) is positively related to investment efficiency for large U.S. publicly traded companies. We examine the role of FRQ in private firms from emerging markets, a setting in which extant research suggests that FRQ would be less conducive to the mitigation of investment inefficiencies. Earlier studies show that private firms have lower FRQ, presumably because of lower market demand for public information. Prior research also shows that FRQ is lower in countries with low investor protection, bank-oriented financial systems, and stronger conformity between tax and financial reporting rules. Using firm-level data from the World Bank, our empirical evidence suggests that FRQ positively affects investment efficiency. We further find that the relation between FRQ and investment efficiency is increasing in bank financing and decreasing in incentives to minimize earnings for tax purposes. Such a connection between tax-minimization incentives and the informational role of earnings has often been asserted in the literature. We provide explicit evidence in this regard.

scholarly journals The Investment Efficiency Of Private And Public Firms: Evidence From Korea

2015 ◽  
Vol 31 (4) ◽  
pp. 1387 ◽  
Author(s):  
Keehwan Kim ◽  
Ohjin Kwon
Keyword(s):  
Information Asymmetry ◽  
Financial Reporting ◽  
Agency Problem ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Private Firms ◽  
Investment Efficiency ◽  
Public Firms ◽  
Private And Public ◽  
The Difference

<p class="s0">This study examines the investment efficiency of private and public firms in Korea. Prior studies suggest that the investment efficiency of firms can change according to the companies' agency problem caused by the existence of information asymmetry. Moreover, they argue that there is less information asymmetry in private firms than in public firms, because the major investors of private firms have access to the internal information of the companies. We extend these studies by comparing the investment efficiency of private and public firms using an extended audited financial dataset of Korean firms. Our results show that the investment efficiency of private firms is higher than that of public firms, because the agency problem of the former is lower than that of the latter. Additionally, private firms invest more efficiently in R&amp;D and capital expenditures than public firms. Further, when we use alternative exogenous firm-specific proxies to measure the likelihood of over or under-investment, the results are substantially consistent with the main results. Finally, we re-test our hypotheses by including financial reporting quality proxies as control variables in the main regression model. These investigations further support our main results. Our study contributes to emerging literature on the difference between private and public firms by showing that the investment efficiency of the former is different from that of the latter. In addition, this study provides additional evidence on the agency problem that affects firms' investment decisions.</p>

Financial reporting quality, family ownership, and investment efficiency

2019 ◽  
Vol 45 (4) ◽  
pp. 513-535 ◽  
Author(s):  
Faisal Shahzad ◽  
Ijaz Ur Rehman ◽  
Sisira Colombage ◽  
Faisal Nawaz
Keyword(s):  
Financial Reporting ◽  
Family Firms ◽  
Emerging Market ◽  
Reporting Quality ◽  
Least Square ◽  
Financial Reporting Quality ◽  
Family Ownership ◽  
Investment Efficiency ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to empirically investigate the impact of two monitoring mechanisms: family ownership (FO) and financial reporting quality (FRQ) on investment efficiency (IE) over the period of 2007–2014 for listed firms on the Pakistan Stock Exchange. Design/methodology/approach The authors employ two-dimensional pooled OLS cluster at the firm and year level, two-stage least square regression and feasible generalized lease square regression regression methods. Findings The findings suggest that higher FRQ and FO are associated with higher IE. Further, the authors report that higher FRQ and FO mitigate over- and under-investment. The impact of FRQ on IE is stronger (weaker) for family-controlled businesses. The results for these particular estimates are robust for alternative estimation techniques and measures of FRQ and FO. Originality/value The study draws on both agency and behavioral agency theories and therefore contributes to the literature in the following ways. First, the authors examine a relationship between FRQ and IE. Second, the authors test the impact of FO on IE. Third, the authors test the moderating impact of FO on the relationship between FRQ and the IE of family and non-family firms in relatively less regulated emerging market.

scholarly journals Pengaruh Kualitas Pelaporan Keuangan Dan Sustainability Reporting Pada Efisiensi Investasi

2019 ◽  
pp. 188
Author(s):  
Ni Putu Lisna Vitriani ◽  
I. G. A. N. Budiasih
Keyword(s):  
Financial Reporting ◽  
Stock Exchange ◽  
Reporting Quality ◽  
Sustainability Reporting ◽  
Sampling Technique ◽  
Total Sample ◽  
Financial Reporting Quality ◽  
Investment Efficiency ◽  
Analysis Technique

The purpose of this study is to obtain empirical evidence regarding the effec of financial reporting quality and Sustainability Reporting on investment efficiency. This research was conducted on all non-financial companies listed on the Indonesia Stock Exchange in 2015-2017. The sampling technique used in this study was a purposive sampling. The samples taken were 16 companies with a total sample observation of 48 in 3 years. The data analysis technique used is Multiple Linear Regression. Based on the results of the study it is known that the higher the financial reporting quality of a company, the higher the level of efficiency of the company's investment and it is known that Sustainability Reporting has no effect on the efficiency of the company's investment. The results of this study are the practice of stakeholder theory and agency theory carried out by the company to maintain the long-term operational sustainability of the company. Keywords: Financial reporting quality, Sustainability Reporting, investment efficiency.

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