Can information disclosure technology improve investment efficiency? Empirical evidence from China

Songsheng Chen, Sophie X. Kong and Shaodong Luo

International Journal of Financial Services Management, 2018, vol. 9, issue 2, 168-186

Abstract: We study the impact of adopting a new financial reporting technology, XBRL (eXtensible Business Reporting Language) on firms' investment efficiency in the Chinese market. Our primary finding is that adoption of XBRL is associated with improvement in investment efficiency. Specifically, XBRL implementation significantly curbs both under- and over-investment for all listed Chinese firms and the impact on over-investment is six to nine times larger than that on under-investment. This negative association of XBRL adoption and investment inefficiencies is robust after controlling for firms' financial constraints as well as whether a firm is SOE (state-owned-enterprise), both of which affect a firm's availability of capital and thus investment efficiency.

Keywords: XBRL; eXtensible Business Reporting Language; financial reporting quality; investment efficiency; state-owned enterprise. (search for similar items in EconPapers)
Date: 2018
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