Companies’ Sustainable Growth, Accounting Quality, and Investments Performances. The Case of the Romanian Capital Market

Mihai Carp, Leontina Păvăloaia, Constantin Toma, Iuliana Eugenia Georgescu and Mihai-Bogdan Afrăsinei
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Mihai Carp: Department of Accounting, Business Information Systems and Statistics, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, 700506 Iasi, Romania
Leontina Păvăloaia: Department of Accounting, Business Information Systems and Statistics, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, 700506 Iasi, Romania
Constantin Toma: Department of Accounting, Business Information Systems and Statistics, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, 700506 Iasi, Romania
Iuliana Eugenia Georgescu: Department of Accounting, Business Information Systems and Statistics, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, 700506 Iasi, Romania
Mihai-Bogdan Afrăsinei: Department of Accounting, Business Information Systems and Statistics, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, 700506 Iasi, Romania

Sustainability, 2020, vol. 12, issue 22, 1-16

Abstract: The paper analyzes the influence of sustainable growth ( SGR ) as a reflection of the manner of strategic business organization, particularly in the quality of reported financial information (magnitude of discretionary accruals— DAC ) as an expression of the ethical attitude adopted by companies in the entity–investor relationship, on the investors’ decisions, substantiated in the performance level of the shares held. Using models consecrated in the literature, the results reflect a significant influence, both in the case of separate testing of the two factors ( SGR and DAC ), and in the case of the conjugated action thereof, on investment performance. The relations were also tested by introducing certain control variables into the analysis, such as: the intangible ratio, quick ratio, company size, as well as the SGR sensitivity function of the level of information quality. In the case of financial information quality, specific indicators from the two consecrated value relevance testing models by Ohlson (1995) and Easton and Harris (1991) were used as control variables. The obtained results are robust, preserving the sense and intensity of the influences. However, in the case of testing for the influence of information quality on share price, it was noticed an insignificant relation, associated with the situation in which, to execute some speculative transactions, investors particularly interpreted conjunctural factors. The study contributes to the development of the specialty literature by highlighting the role of internal growth and information quality as determinant factors in the investors’ analyses, while also offering a potentially practical tool for assessing the opportunity of making placements in the capital of companies.

Keywords: sustainable company growth; accounting information quality; discretionary accruals; investment performance; Romanian capital market (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:22:p:9748-:d:449331

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