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Does corporate investment efficiency affect corporate disclosure practices?

Author

Listed:
  • Noha Elberry
  • Khaled Hussainey

Abstract

Purpose - The authors examine the impact of corporate investment efficiency on corporate voluntary disclosure for a sample of UK non-financial companies. Design/methodology/approach - The authors use a sample of FTSE All-Share firms for the period of 2007–2014. Disclosure scores are collected from Corporate Financial Information Environment (CFIE). They follow Biddleet al.(2009) and Chenet al.(2011) in measuring corporate investment efficiency. Findings - The authors find that high level of performance-related disclosure is associated with high level of corporate investment efficiency, while high level of good news information is associated with low level of corporate investment efficiency. They also find evidence on a bidirectional relation between disclosure and corporate investment efficiency. Research limitations/implications - The authors’ findings would be of importance to stakeholders and corporations. Stakeholders' investment decisions could be facilitated by understanding the disclosures provided by their firms and how these firms' performance is presented. Corporations become aware of the language which must be used to signal their performance. Practical implications - Corporations become aware of the language which must be used in their disclosures. As firms may reflect their efficient investments but not in the form of good news in order to avoid revealing their competitive advantage to competitors. Originality/value - This paper adds to disclosure studies by introducing a new variable, corporate investment efficiency, as a determinant of corporate disclosure practice.

Suggested Citation

  • Noha Elberry & Khaled Hussainey, 2020. "Does corporate investment efficiency affect corporate disclosure practices?," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 21(2), pages 309-327, April.
  • Handle: RePEc:eme:jaarpp:jaar-03-2019-0045
    DOI: 10.1108/JAAR-03-2019-0045
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    Citations

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    Cited by:

    1. Ibrahim M. Menshawy & Rohaida Basiruddin & Nor‐Aiza Mohd‐Zamil & Khaled Hussainey, 2023. "Strive towards investment efficiency among Egyptian companies: Do board characteristics and information asymmetry matter?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2382-2403, July.
    2. Noha Elberry & Khaled Hussainey, 2021. "Governance Vis-à-Vis Investment Efficiency: Substitutes or Complementary in Their Effects on Disclosure Practice," JRFM, MDPI, vol. 14(1), pages 1-16, January.
    3. Iman Harymawan & Mohammad Nasih & Dian Agustia & Fajar Kristanto Gautama Putra & Hadrian Geri Djajadikerta, 2022. "Investment efficiency and environmental, social, and governance reporting: Perspective from corporate integration management," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1186-1202, September.

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