Financial Reporting Quality and Private Firms’ Access to Trade Credit Capital

2021 ◽  
Author(s):  
Anastasios Elemes ◽  
Andrei Filip
Keyword(s):  
Financial Reporting ◽  
Trade Credit ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Private Firms

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>

The impact of financial reporting quality on debt maturity: the case of private firms

2018 ◽  
Vol 48 (7) ◽  
pp. 759-781 ◽  
Author(s):  
Michiel De Meyere ◽  
Heidi Vander Bauwhede ◽  
Philippe Van Cauwenberge
Keyword(s):  
Financial Reporting ◽  
Reporting Quality ◽  
Debt Maturity ◽  
Financial Reporting Quality ◽  
Private Firms ◽  
The Impact

scholarly journals Contracting debt and the quality of financial reporting in private firms

2018 ◽  
Vol 63 (2) ◽  
pp. 37
Author(s):  
Inna Sousa Paiva
Keyword(s):  
Financial Performance ◽  
Financial Reporting ◽  
Strong Evidence ◽  
Reporting Quality ◽  
Discretionary Accruals ◽  
Financial Reporting Quality ◽  
Private Firms ◽  
Bank Debt ◽  
Using Data

<p class="Default"><span lang="EN-US">This study investigates whether the quality of firms’ financial reporting is influenced by the con­tracting of debt, using data on Portuguese private firms from 2013 to 2015. More specifically, the study uses earnings smoothing, magnitude of absolute discretionary accruals, and timeliness of disclosure as proxies for financial reporting quality. I find that private firms which contract more debt exhibit higher levels of financial reporting quality. Additionally, firms that contract larger amounts of debt and with a good financial performance tend to exhibit lower quality financial reporting. The results provide strong evidence that private firms have an interest in camouflaging their performance in the presence of higher levels of bank debt. </span></p>

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