Financial Information Quality and Investment Decision

• Main Authors: Yu Lin Wu, 吳昱霖
• Other Authors: C. L. Liu
• Format: Others
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/62653063853358811275

碩士 === 長庚大學 === 工商管理學系 === 98 === Prior studies suggest that higher-quality financial information can enhance investment efficiency by mitigating information asymmetries such as moral hazard and adverse selection, this article extends previous research and explores whether information transparency, measured by the announcement of the Information Disclosure and Transparency Ranking System, is associated with a reduction of over-investment or with a reduction of under-investment. We use Pooled Regression Model to examine the relationship between information transparency and investment decision, the sample covers all public listed firms from 2003 to 2007. The empirical results show that information transparency is positively associated with investment among firms with higher likelihood of under-investment; on the other hand, information transparency is negatively associated with investment among firms with higher likelihood of over-investment. In additions, institutional ownership and board of directors are associated with lower over- and under-investment. Overall, information transparency, institutional ownership, and board of directors have a monitoring effect on firm capital investment decision.