Accounting information quality,governance efficiency and capital investment choice

This paper examines the relationship between accounting information quality and capital investment choice from the perspective of accounting information's governance function.Measuring capital investment choice as the correlation of growth of operating income between company and industry,this paper investigates whether and to what extent companies focus on their core business.The results show that the higher the quality of publicly listed firms' accounting information,the stronger that correlation,particularly when the corporate governance of the listed company is poor.The findings imply that accounting information quality can thus optimize the capital investment choice,which complements and strengthens the functioning of corporate governance.Hence,regulators should pay more attention to the market's power to supervise the behavior of listed firms,improve the governance functions of accounting information and increase the efficiency of capital allocation.

The Impact of Accounting Information Quality on Corporate Labor Investment Efficiency:Evidence from China

As an important part of the enterprise information system,accounting information plays a significant role in enterprise management decision-making,This study investigates the impact of accounting information quality on corporate labor investment efficiency.Using a sample of Chinese listed firms,we show that higher accounting information quality is associated with higher labor investment efficiency(i.e.,a lower deviation of labor investment from the expected employment level justified by economic fundamentals).Firms with higher accounting information quality reduce underinvestment and overinvestment in labor by alleviating financial constraints and agency conflicts.Cross-sectional tests indicate that this effect is more pronounced among non-state-owned enterprises and firms with higher labor adjustment costs.The robustness test shows that our results are robust to alternative proxies,endogeneity concerns,and controls for non-labor investments.This study sheds light on how enterprise information systems influence management decision-making practices from the perspective of accounting information quality.

Can material asset reorganizations affect acquirers' debt financing costs?——Evidence from the Chinese Merger and Acquisition Market

In this paper, we investigate whether material asset reorganizations(MARs), a special form of merger and acquisition(M&A) transactions, can affect the acquirers' cost of debt financing. Further, we examine the effect of acquiring firms' accounting information quality on the cost of debt and on the association between MARs and debt costs. We predict that compared to conventional M&As, large-scale acquisitions through MARs can generate a much greater influx of assets from target firms. This raises the acquirers' asset collateral and thus reduces the cost of debt. Because the quality of accounting information is a key factor affecting the cost of debt, we suggest that it has a spillover effect on the debt-cost effect of MARs. Using M&A transactions by listed companies in the Chinese A-share market from 2008 to 2014 as our sample, we find that MARs are associated with a higher asset collateral and lower ex post cost of debt than conventional M&As. Furthermore, we show that the acquiring firms' accounting information quality has a significant negative effect on debt costs, and the negative association between MARs and the cost of debt is more pronounced when accounting information quality is higher.