Financial Statement Comparability and Corporate Investment Efficiency

  • Al Yahyaee, Khamis (PI)

المشروع: Other project

تفاصيل المشروع

Description

Previous research has shown that comparability between financial statements is beneficial for publicly traded companies. We propose to examine the association between financial statement comparability and corporate investment efficiency. We argue that financial statement comparability allows investors to effectively evaluate and monitor ?rms? investment projects. Investors can use information reported by peer ?rms to mitigate uncertainties about market conditions and distinguish better investment projects from poorer ones. As a result, comparability mitigates adverse selection and, thus, reduces under-investment. Previous studies also indicated that market competition can reduce the transparency of the information environment, thus leading to negative effects on corporate investment decision-making. We will investigate whether product market competition mediates the relation between financial statement comparability and investment efficiency. We expect our results to be relevant for those interested in alternative modes of investment efficiency, financial statement comparability, and firm-fixed effect models.

Layman's description

Previous research has shown that comparability between financial statements is beneficial for publicly traded companies. We propose to examine the association between financial statement comparability and corporate investment efficiency. We argue that financial statement comparability allows investors to effectively evaluate and monitor ?rms? investment projects. Investors can use information reported by peer ?rms to mitigate uncertainties about market conditions and distinguish better investment projects from poorer ones. As a result, comparability mitigates adverse selection and, thus, reduces under-investment. Previous studies also indicated that market competition can reduce the transparency of the information environment, thus leading to negative effects on corporate investment decision-making. We will investigate whether product market competition mediates the relation between financial statement comparability and investment efficiency. We expect our results to be relevant for those interested in alternative modes of investment efficiency, financial statement comparability, and firm-fixed effect models.
اختصارTTotP
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بصمة

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