The Determinants and Economic Consequences of Financial Reporting Quality
Date Issued
2008
Date
2008
Author(s)
Lin, Fang-Ju
Abstract
Referring to Cohen (2007), I select the publicly traded firms between 1996 and 2006 as the research sample, and further discuss the determinants and consequences of information quality. I investigate the determinants and consequences of financial from two aspects: exogenous and endogenous, and find out that higher proprietary costs are associated with lower quality of financial information. Moreover, there is a significant negative relation between E/P ratio and information quality. And there is a significant negative relation between cost of capital and information quality. Under the exogenous assumption, the relation between idiosyncratic risk and information quality is not significant. However, under the endogenous assumption, there is a significant negative relation between idiosyncratic risk and information quality; these findings imply there might be endogenous problem between information quality and consequences.
Subjects
information quality
determinants
cost of capital
E/P ratio
idiosyncratic risk
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