The Approach of Accounting Information Quality on Investment Efficiency—Empirical Evidence from Chinese Listed Companies

Abstract

This paper studies the approach of accounting information quality on investment efficiency, from the context of the Chinese reality system. The empirical results confirm that the proxy for accounting information quality is negatively associated with over-investment or under-investment. Furthermore, there is a negative association between the quality of accounting information and the future investment for firms classified as over-investment and a positive association between the quality of accounting information and the future investment for firms classified as under-investment. The results suggest that the improvement of accounting information quality helps to restrict companies from over-investment and helps the companies to mitigate under-investment.