The relation between reporting quality and financing and investment : evidence from changes in financing capacity

Balakrishnan, K, Core, J E and Verdi, R (2013) The relation between reporting quality and financing and investment : evidence from changes in financing capacity. Journal of Accounting Research, 52 (1). pp. 1-36. ISSN 0021-8456

Abstract

We use changes in the value of a firm's real estate assets as an exogenous change in a firm's financing capacity to examine (1) the relation between reporting quality and financing and investment conditional on this change, and (2) firms’ reporting quality responses to the change in financing capacity. We find that financing and investment by firms with higher reporting quality is less affected by changes in real estate values than are financing and investment by firms with lower reporting quality. Further, firms increase reporting quality in response to decreases in financing capacity. Our findings contribute to the literature on reporting quality and investment, and on the determinants of reporting quality choices.

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Item Type: Article
Subject Areas: Accounting
Additional Information: © 2013. The Accounting Research Center at the University of Chicago Booth School of Business
Subjects: I > Investment appraisal
L > Land and real estate
Date Deposited: 13 Dec 2016 12:24
Last Modified: 26 Mar 2019 14:03
URI: http://lbsresearch.london.edu/id/eprint/597
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