Does corporate investment efficiency affect corporate disclosure practices?
Journal of Applied Accounting Research
ISSN: 0967-5426
Article publication date: 21 April 2020
Issue publication date: 15 May 2020
Abstract
Purpose
The authors examine the impact of corporate investment efficiency on corporate voluntary disclosure for a sample of UK non-financial companies.
Design/methodology/approach
The authors use a sample of FTSE All-Share firms for the period of 2007–2014. Disclosure scores are collected from Corporate Financial Information Environment (CFIE). They follow Biddle et al. (2009) and Chen et al. (2011) in measuring corporate investment efficiency.
Findings
The authors find that high level of performance-related disclosure is associated with high level of corporate investment efficiency, while high level of good news information is associated with low level of corporate investment efficiency. They also find evidence on a bidirectional relation between disclosure and corporate investment efficiency.
Research limitations/implications
The authors’ findings would be of importance to stakeholders and corporations. Stakeholders' investment decisions could be facilitated by understanding the disclosures provided by their firms and how these firms' performance is presented. Corporations become aware of the language which must be used to signal their performance.
Practical implications
Corporations become aware of the language which must be used in their disclosures. As firms may reflect their efficient investments but not in the form of good news in order to avoid revealing their competitive advantage to competitors.
Originality/value
This paper adds to disclosure studies by introducing a new variable, corporate investment efficiency, as a determinant of corporate disclosure practice.
Keywords
Citation
Elberry, N. and Hussainey, K. (2020), "Does corporate investment efficiency affect corporate disclosure practices?", Journal of Applied Accounting Research, Vol. 21 No. 2, pp. 309-327. https://doi.org/10.1108/JAAR-03-2019-0045
Publisher
:Emerald Publishing Limited
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