Does forward-looking non-financial information consistently affect investment efficiency?. Issue 1 (2nd March 2015) - Tan, Youchao
Abstract : Purpose: – The aim of this paper, which is based on Cheng et al. 's (2012) research, is to re-examines the relationship between a firms' voluntary disclosure of forward-looking non-financial information (FNFI) and investment efficiency. Design/methodology/approach: – The authors chose firms that publicly traded in the Shenzhen and Shanghai stock markets from 2005 to 2011, a total of 926 firms and 6, 482 firm-year. To control the endogeneity problem between FNFI and investment efficiency, the authors lagged the FNFI variable for one year. Findings: – The authors found that FNFI alleviates a firms' underinvestment but leads to overinvestment. These effects become gradually weaker over time. In addition, the results indicate that corporate governance helps improve the quality of FNFI, thus boosting investors' confidence and easing financial constraints. Research limitations/implications: – The limitations of this paper are mainly focused on the measure of FNFI. The authors only considered the quantity of FNFI disclosed by firms and ignored other characteristics of FNFI. Originality/value: – Based on Cheng et al. 's (2012) static findings, this paper considers the dynamic role of FNFI in firms' investment decisions.