{"title":"Impact of financial reporting quality on investment efficiency and role of investor protection in frontier markets","authors":"Muhammad Azhar Khan, Saadia Irfan, Samina Naveed","doi":"10.1108/raf-07-2023-0220","DOIUrl":null,"url":null,"abstract":"\nPurpose\nThis study aims to examine the link between financial reporting quality and investment efficiency in publicly listed firms in frontier markets, taking into account country-level investor protection. By comparing real and accrual earnings management, this paper demonstrates the context-dependent nature of the impact of financial reporting quality. It emphasises the importance of improving investor protection and reducing agency conflicts in promoting investment efficiency in frontier markets.\n\n\nDesign/methodology/approach\nAccounting data from 1998 to 2020 are collected for all listed firms in six frontier market countries across 21 industries. Fixed-effect regression analysis is used to test causal relationships; several robustness checks are performed; and two-stage least squares is used to address endogeneity concerns.\n\n\nFindings\nHigher financial reporting quality improves investment efficiency in frontier markets. Furthermore, the positive effect is amplified when country-level investor protection in frontier markets is strong.\n\n\nOriginality/value\nThese findings add to the growing body of evidence showing that financial reporting quality improves investment efficiency, even in frontier markets. Furthermore, the level of investor protection within a country strengthens this relationship, particularly in firms that are prone to underinvestment.\n","PeriodicalId":3,"journal":{"name":"ACS Applied Electronic Materials","volume":"62 24","pages":""},"PeriodicalIF":4.3000,"publicationDate":"2024-06-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"ACS Applied Electronic Materials","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1108/raf-07-2023-0220","RegionNum":3,"RegionCategory":"材料科学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ENGINEERING, ELECTRICAL & ELECTRONIC","Score":null,"Total":0}
引用次数: 0
Abstract
Purpose
This study aims to examine the link between financial reporting quality and investment efficiency in publicly listed firms in frontier markets, taking into account country-level investor protection. By comparing real and accrual earnings management, this paper demonstrates the context-dependent nature of the impact of financial reporting quality. It emphasises the importance of improving investor protection and reducing agency conflicts in promoting investment efficiency in frontier markets.
Design/methodology/approach
Accounting data from 1998 to 2020 are collected for all listed firms in six frontier market countries across 21 industries. Fixed-effect regression analysis is used to test causal relationships; several robustness checks are performed; and two-stage least squares is used to address endogeneity concerns.
Findings
Higher financial reporting quality improves investment efficiency in frontier markets. Furthermore, the positive effect is amplified when country-level investor protection in frontier markets is strong.
Originality/value
These findings add to the growing body of evidence showing that financial reporting quality improves investment efficiency, even in frontier markets. Furthermore, the level of investor protection within a country strengthens this relationship, particularly in firms that are prone to underinvestment.
期刊介绍:
ACS Applied Electronic Materials is an interdisciplinary journal publishing original research covering all aspects of electronic materials. The journal is devoted to reports of new and original experimental and theoretical research of an applied nature that integrate knowledge in the areas of materials science, engineering, optics, physics, and chemistry into important applications of electronic materials. Sample research topics that span the journal's scope are inorganic, organic, ionic and polymeric materials with properties that include conducting, semiconducting, superconducting, insulating, dielectric, magnetic, optoelectronic, piezoelectric, ferroelectric and thermoelectric.
Indexed/Abstracted:
Web of Science SCIE
Scopus
CAS
INSPEC
Portico