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Reporting matters: the real effects of financial reporting on investing and financing decisions

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  • Catherine Shakespeare

Abstract

In this paper, I provide an overview of the research on the real effects of financial reporting on investing and financing decisions made by firms. Accounting can improve investment efficiency and affect nearly every aspect of the financing decision by reducing information asymmetry and improving monitoring. However, limitations in the financial reporting system, specifically distinguishing liabilities from equity and determining control for consolidations, result in opportunities to structure transactions to achieve certain financial reporting outcomes. A recent new stream of research documents a link between accounting and macroeconomic indicators, providing evidence that accounting predicts revisions in these indicators. An interesting avenue for future research could be to investigate the link between accounting, investing and financing, and macroeconomic performance.

Suggested Citation

  • Catherine Shakespeare, 2020. "Reporting matters: the real effects of financial reporting on investing and financing decisions," Accounting and Business Research, Taylor & Francis Journals, vol. 50(5), pages 425-442, July.
    • Handle: RePEc:taf:acctbr:v:50:y:2020:i:5:p:425-442
    DOI: 10.1080/00014788.2020.1770928
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    Cited by:

    1. Biehl, Henrike & Bleibtreu, Christopher & Stefani, Ulrike, 2024. "The real effects of financial reporting: Evidence and suggestions for future research," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 54(C).
    2. Chang-Chih Chen & Kung-Cheng Ho & Hui-Min Li & Min-Teh Yu, 2023. "Impact of information disclosure ratings on investment efficiency: evidence from China," Review of Quantitative Finance and Accounting, Springer, vol. 60(2), pages 471-500, February.
    3. Ibo, Sunday Adekoya & Olasupo, Rachael Ifeoluwa, 2024. "Normative Accounting Theory and Investment Decision in Selected Listed Manufacturing Companies of Consumer Goods in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(8), pages 2196-2212, August.
    4. Deng, Qi & Zheng, Linhong & Peng, Jiaqi & Li, Xu & Zhou, Zhong-guo & Hussein, Monica & Chen, Dingyi & Swartz, Mick, 2024. "The impacts of registration regime implementation on IPO pricing efficiency," International Review of Financial Analysis, Elsevier, vol. 93(C).

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