The Effects of Financial Reporting and Disclosure on Corporate Investment: A Review

82 Pages Posted: 3 Aug 2019

See all articles by Sugata Roychowdhury

Sugata Roychowdhury

Boston College

Nemit Shroff

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

Rodrigo S. Verdi

Massachusetts Institute of Technology (MIT)

Date Written: July 30, 2019

Abstract

A fundamental question in accounting is whether and to what extent financial reporting facilitates the allocation of capital to the right investment projects. Over the last two decades, a large and growing body of literature has contributed to our understanding of whether and why financial reporting affects investment decision-making. We review the empirical literature on this topic, provide a framework to organize this literature, and highlight opportunities for future research.

Keywords: financial accounting, disclosure, real effects, investment, M&A, capital budgeting, agency frictions

JEL Classification: D82, M4, M41, G31

Suggested Citation

Roychowdhury, Sugata and Shroff, Nemit and Verdi, Rodrigo S., The Effects of Financial Reporting and Disclosure on Corporate Investment: A Review (July 30, 2019). Journal of Accounting & Economics (JAE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=3429337

Sugata Roychowdhury

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
617-552-1764 (Phone)

Nemit Shroff (Contact Author)

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

100 Main St.
E62-679
Cambridge, MA MA 02142
United States
6173240805 (Phone)

HOME PAGE: http://mitsloan.mit.edu/faculty/detail.php?in_spseqno=51407&co_list=F

Rodrigo S. Verdi

Massachusetts Institute of Technology (MIT) ( email )

Sloan School of Management
100 Main Street E62-666
Cambridge, MA 02142
United States
(617) 253 2956 (Phone)

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