Abstract

http://ssrn.com/abstract=1952722
 
 

References (69)



 


 



The Effect of Financial Reporting on Corporate Investment during the Global Financial Crisis


Karthik Balakrishnan


London Business School

Ross L. Watts


Massachusetts Institute of Technology (MIT) - Sloan School of Management

Luo Zuo


Cornell University - Samuel Curtis Johnson Graduate School of Management

April 16, 2014

MIT Sloan Research Paper No. 4941-11

Abstract:     
This paper examines the effect of financial reporting on firm-level investment during the 2007-2008 global financial crisis. Using a differences-in-differences setup, we find that firms with less conservative accounting experienced a sharper decline in investment activity following the onset of the crisis than firms with more conservative accounting. This relation is stronger for firms that are financially constrained, face greater external financing needs, or have higher information asymmetry. We also find that more conservative firms experienced lower declines in both debt raising activity and stock performance. In sum, we document the effects of accounting on corporate sector during the crisis.

Number of Pages in PDF File: 48

Keywords: Financial Reporting; Accounting Conservatism; Investment; Information Frictions; Financing Constraints; Crisis

JEL Classification: G01; G14; G31; G32; G34; M41

working papers series


Download This Paper

Date posted: November 1, 2011 ; Last revised: April 17, 2014

Suggested Citation

Balakrishnan, Karthik and Watts, Ross L. and Zuo, Luo, The Effect of Financial Reporting on Corporate Investment during the Global Financial Crisis (April 16, 2014). MIT Sloan Research Paper No. 4941-11. Available at SSRN: http://ssrn.com/abstract=1952722 or http://dx.doi.org/10.2139/ssrn.1952722

Contact Information

Karthik Balakrishnan
London Business School ( email )
Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom
Ross L. Watts
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
E52-325
Cambridge, MA 02142
United States
Luo Zuo (Contact Author)
Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )
362 Sage Hall
Ithaca, NY 14853
United States
607-255-4002 (Phone)
HOME PAGE: http://www.johnson.cornell.edu/Faculty-And-Research/Profile.aspx?id=lz352

Feedback to SSRN


Paper statistics
Abstract Views: 5,876
Downloads: 1,730
Download Rank: 4,258
References:  69

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.485 seconds