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- Title
Does Disclosure of Non- Financial Statement Information Reduce Firms' Propensity to Under-Invest?
- Authors
HUNG-YUAN LU
- Abstract
This study examines whether disclosure of non-financial statement (NFS) information mitigates the under-investment problem, presumably by reducing information asymmetry between a firm and its potential stakeholders. I present several findings. First, I document that a firm that provides more NFS information is less likely to under-invest. Second, by classifying NFS disclosures into those that are more relevant to equity holders and those more relevant to debt holders, I find that equityrelated disclosures are negatively associated with the degree of underinvestment. Last, I find weak evidence that equity-related disclosures are positively associated with subsequent equity financing. I do not find similar results for debt-related disclosures.
- Subjects
FINANCIAL disclosure; FINANCIAL statements; STOCKS (Finance); INFORMATION asymmetry; BUSINESS enterprises
- Publication
Quarterly Journal of Finance & Accounting, 2014, Vol 51, Issue 3/4, p1
- ISSN
1939-8123
- Publication type
Article
- DOI
10.2307/qjfinacct.51.3-4.1