The Role of Financial Reporting in Resolving Uncertainty about Corporate Investment Opportunities

Ferracuti, Elia; Stubben, Stephen

doi:10.2139/ssrn.3432772

Cited by 12 publications

(25 citation statements)

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“…These findings suggest global investors consume various elements of financial statements, shedding new light on the precise type of financial information global investors use when reallocating capital (Ferracuti and Stubben (2019)). Taken together, the negative relation is consistent with private firm disclosures being more idiosyncratic, which leads to an economically significant reduction in the demand for public equity.…”

Section: Introductionmentioning

confidence: 91%

How Does Private Firm Disclosure Affect Demand for Public Firm Equity? Evidence from the Global Equity Market

Kim¹,

Olbert

2021

SSRN Journal

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Section: Introductionmentioning

confidence: 91%

How Does Private Firm Disclosure Affect Demand for Public Firm Equity? Evidence from the Global Equity Market

Kim¹,

Olbert

2021

SSRN Journal

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“…On the other hand, better quality financial information may also help firms achieve organic growth due to the following reasons. First, financial reporting can facilitate investments in new projects and improve operating efficiency of existing assets‐in‐place by increasing opportunities of learning from other sources (Ferracuti and Stubben 2019, Roychowdhury et al. 2019).…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

“…In addition to peer firms' disclosures, managers could also learn from financial information reported by joint‐venture partners, suppliers, and customers. Information from these different sources will enable managers to reduce investment uncertainty, identify new investment opportunities, predict possible responses of competitors and partners, and enhance the operational efficiency of existing assets (Ferracuti and Stubben 2019). Furthermore, a firm's financial information can also serve a role of market coordination by reducing competitors' and partners' uncertainty about its actions (e.g., Palepu et al.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Do Accounting Standards Matter for Productivity?

Banker

Huang

et al. 2021

Production and Operations Management

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In this study, we examine whether productivity shifts when accounting standards change. Using mandatory International Financial Reporting Standards (IFRS) as a shock to the accounting regime, we examine the changes in country‐level productivity. We find that mandatory IFRS‐adopting countries experience significant increases in total factor productivity (TFP) and labor productivity. The post‐adoption productivity improvements are greater for countries without IFRS convergence. Further, TFP increases more for countries that experience a larger increase in industry comparability. Taken together, the evidence suggests that the new IFRS accounting regime increases economic productivity via improving information environments and facilitating internal firm decisions.

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“…Evidence indicates that expanding and deepening the financial system leads to faster economic growth. Without completely settling the issue of causality trend, this empirical literature has made significant progress in establishing that the external component of financial instruments has a positive effect on economic growth and investment (Ferracuti, E., & Stubben, S. R. 2019). To identify investment opportunities for companies from market prices and thus reduce information uncertainty.…”

Section: Literature Review and Development Of Conceptual Frameworkmentioning

confidence: 99%

Financial Instruments and Their Impact on the Growth of Investment – A Study on the Libyan Market

Alhaj

Awn

Alaswed

2020

EJEFR

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Purpose: The aim of this study was to explore the relationship between Financial instruments and growth of investment. Design/Methodology/Approach: The distributed questionnaires include 300 clients from banks and companies represented in Tripoli. The data collected was analyzed using SPSS- SEM. Results: The obtained results showed that indicated that, despite the modest progress made in a very short time regarding all indicators which the paper calculated, however, it can be said that Libyan stock market remain largely underdeveloped, small and relatively ineﬃcient. Its market capitalization to GDP is very low and investors have no access to long-term capital. In addition, the market still has very low liquidity and investors still have a limited choice of ﬁnancial instruments and face liquidity problems. Originality/Value: This study contributes significantly to the importance of diversity in the use of financial instruments that help in the growth of investment. The study added a new discussion, which is the disclosure that financial instruments affect the growth of domestic investment, especially by easing financing restrictions, which allows companies to increase investment in response to increased demand for production. The main finding is that the structure of the financial system does not have an independent effect on investment growth, in the sense that it does not enhance the response of investment to changes in production, whereas financial development makes investment more responsive to output growth. Thus, instead of promoting a specific type of financial instrument, countries should implement policies that reduce transaction costs in financial intermediation and enforce the rights of creditors and investors. This will facilitate the development of banks and stock markets, which will stimulate the growth of domestic investment. JEL: D53; G14; O16

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The Role of Financial Reporting in Resolving Uncertainty about Corporate Investment Opportunities

Cited by 12 publications

References 0 publications

How Does Private Firm Disclosure Affect Demand for Public Firm Equity? Evidence from the Global Equity Market

How Does Private Firm Disclosure Affect Demand for Public Firm Equity? Evidence from the Global Equity Market

Do Accounting Standards Matter for Productivity?

Financial Instruments and Their Impact on the Growth of Investment – A Study on the Libyan Market

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