Does Corporate Transparency Contribute to Efficient Resource Allocation?
Journal of Accounting Research, May 2009
70 Pages Posted: 16 Jun 2009
Abstract
This paper examines whether a country's corporate transparency environment, which includes the quality of accounting information, contributes to efficient resource allocation. Based on a cross-country study of 37 manufacturing industries in 37 countries, we provide three pieces of related evidence. First, we find the contemporaneous correlations in industry growth rates across country pairs are higher when there is a greater level of corporate transparency in the country pairs, after controlling for country-level economic and financial development. Second, we find the influence of transparency on these correlations is stronger when country pairs are at similar levels of economic development (GDP). Finally, when we control for the level of transparency explained by a country's institutions in place, we find that residual transparency (unexplained by country-level factors) is associated with industry-specific growth rates. Taken together, the results are consistent with corporate transparency facilitating the allocation of resources across industry sectors.
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Transparency, Financial Accounting Information, and Corporate Governance
By Robert M. Bushman and Abbie J. Smith
-
Financial Accounting Information and Corporate Governance
By Robert M. Bushman and Abbie J. Smith
-
What Determines Corporate Transparency?
By Robert M. Bushman, Joseph D. Piotroski, ...
-
The World Price of Earnings Opacity
By Utpal Bhattacharya, Hazem Daouk, ...
-
R-Squared Around the World: New Theory and New Tests
By Stewart C. Myers and Li Jin
-
R-Squared Around the World: New Theory and New Tests
By Stewart C. Myers and Li Jin
-
Does Greater Firm-Specific Return Variation Mean More or Less Informed Stock Pricing?
By Art Durnev, Randall Morck, ...
-
Does Greater Firm-Specific Return Variation Mean More or Less Informed Stock Pricing?
By Art Durnev, Randall Morck, ...
-
Analyst Activity Around the World
By James J. Chang, Tarun Khanna, ...