Financial reporting quality, debt maturity and investment efficiency

Mª Fuensanta Cutillas Gomariz and Juan Pedro Sánchez Ballesta

Journal of Banking & Finance, 2014, vol. 40, issue C, 494-506

Abstract: This study, conducted with a sample of Spanish listed companies during the period 1998–2008, examines the role of financial reporting quality and debt maturity in investment efficiency. The results show that financial reporting quality mitigates the overinvestment problem. Likewise, lower debt maturity can improve investment efficiency, reducing both overinvestment and underinvestment problems. We further find that financial reporting quality and debt maturity are mechanisms with some degree of substitution in enhancing investment efficiency: firms with lower (higher) use of short-term debt, exhibit higher (lower) financial reporting quality effect on investment efficiency.

Keywords: Investment efficiency; Overinvestment; Underinvestment; Financial reporting quality; Debt maturity (search for similar items in EconPapers)
JEL-codes: G3 G31 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (47)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:40:y:2014:i:c:p:494-506

DOI: 10.1016/j.jbankfin.2013.07.013

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