Accounting for Asymmetry in the Investment–q Relation: Redux of Financial Reporting Quality and Investment Efficiency

References

• Abel AB, Eberly JC (1994) A unified model of investment under uncertainty. Amer. Econom. Rev. 84(5):1369–1384.Google Scholar
• Arrow K (1968) Optimal capital policy with irreversible investment. Wolfe J, ed. Value, Capital, and Growth: Papers in Honor of Sir John Hicks (Aldine Publishing Company, Chicago), 1–19.Google Scholar
• Bai H, Li EX, Xue C, Zhang L (2025) Firm-level irreversibility. Critical Finance Rev. Forthcoming.Crossref, Google Scholar
• Baker M, Stein JC, Wurgler J (2003) When does the market matter? Stock prices and the investment of equity-dependent firms. Quart. J. Econom. 118(3):969–1005.Crossref, Google Scholar
• Ball R, Shivakumar L (2006) The role of accruals in asymmetrically timely gain and loss recognition. J. Accounting Res. 44(2):207–242.Crossref, Google Scholar
• Barnett SA, Sakellaris P (1998) Nonlinear response of firm investment to q: Testing a model of convex and non-convex adjustment costs. J. Monetary Econom. 42(2):261–288.Crossref, Google Scholar
• Biddle G, Hilary G (2006) Accounting quality and firm-level capital investment. Accounting Rev. 81(5):963–982.Crossref, Google Scholar
• Biddle G, Hilary G, Verdi R (2009) How does financial reporting quality relate to investment efficiency? J. Accounting Econom. 48(2–3):112–131.Crossref, Google Scholar
• Brown JR, Fazzari SM, Petersen BC (2009) Financing innovation and growth: Cash flow, external equity, and the 1990s R&D boom. J. Finance 64(1):151–185.Crossref, Google Scholar
• Chirinko RS, Schaller H (2009) The irreversibility premium. J. Monetary Econom. 56(3):390–408.Crossref, Google Scholar
• Choi J, Hann R, Subasi M, Zheng Y (2020) An empirical analysis of analysts’ capital expenditure forecasts: Evidence from corporate investment efficiency. Contemporary Accounting Res. 37(4):2615–2648.Crossref, Google Scholar
• Cooper I (2006) Asset pricing implications of nonconvex adjustment costs and irreversibility of investment. J. Finance 61(1):139–170.Crossref, Google Scholar
• Dechow PM, Dichev ID (2002) The quality of accruals and earnings: The role of accrual estimation errors. Accounting Rev. 77(1):35–59.Crossref, Google Scholar
• Dechow PM, Sloan RG, Sweeney AP (1995) Detecting earnings management. Accounting Rev. 70(2):193–225.Crossref, Google Scholar
• Doms M, Dunne T (1998) Capital adjustment patterns in manufacturing plants. Rev. Econom. Dynam. 1(2):409–429.Crossref, Google Scholar
• Ewens M, Peters RH, Wang S (2024) Measuring intangible capital with market prices. Management Sci. 71(1):407–427.Google Scholar
• Fazzari S, Hubbard RG, Petersen BC (1988) Financing constraints and corporate investment. Brookings Papers Econom. Activity 1988(1):141–195.Crossref, Google Scholar
• Francis J, LaFond R, Olsson P, Schipper K (2005) The market pricing of accruals quality. J. Accounting Econom. 39(2):295–327.Crossref, Google Scholar
• Goodman T, Neamtiu M, Shroff N, White H (2014) Management forecast quality and capital investment decisions. Accounting Rev. 89(1):331–365.Crossref, Google Scholar
• Graham JR (1996) Proxies for the corporate marginal tax rate. J. Financial Econom. 42(2):187–221.Crossref, Google Scholar
• Iqbal A, Rajgopal S, Srivastava A, Zhao R (2024) A better estimate of internally generated intangible capital. Management Sci. 71(1):731–752.Google Scholar
• Jackson S, Liu X, Cecchini M (2009) Economic consequences of firms’ depreciation method choice: Evidence from capital investments. J. Accounting Econom. 48(1):54–68.Crossref, Google Scholar
• Jayaraman S, Wu JS (2019) Is silence golden? Real effects of mandatory disclosure. Rev. Financial Stud. 32(6):2225–2259.Crossref, Google Scholar
• Jones JJ (1991) Earnings management during import relief investigations. J. Accounting Res. 29(2):193–228.Crossref, Google Scholar
• Kermani A, Ma Y (2023) Asset specificity of non-financial firms. Quart. J. Econom. 138(1):205–264.Crossref, Google Scholar
• Lara J, Osma B, Penalva F (2016) Accounting conservatism and firm investment efficiency. J. Accounting Econom. 61(1):221–238.Crossref, Google Scholar
• Loughran T, McDonald B (2024) Measuring firm complexity. J. Financial Quant. Anal. 59(6):2487–2514.Crossref, Google Scholar
• Mummolo J, Peterson E (2018) Improving the interpretation of fixed effects regression results. Political Sci. Res. Methods 6(4):829–835.Crossref, Google Scholar
• Peters RH, Taylor LA (2017) Intangible capital and the investment–q relation. J. Financial Econom. 123(2):251–272.Crossref, Google Scholar
• Ramey V, Shapiro M (2001) Displaced capital: A study of aerospace plant closings. J. Political Econom. 109(5):958–992.Crossref, Google Scholar
• Richardson S (2006) Over-investment of free cash flow. Rev. Accounting Stud. 11:159–189.Crossref, Google Scholar
• Roychowdhury S, Shroff N, Verdi RS (2019) The effects of financial reporting and disclosure on corporate investment: A review. J. Accounting Econom. 68(2–3):1–27.Crossref, Google Scholar
• Song S, Wee H (2023) Bias-corrected nonlinear investment–q relation in the cross section of firms. Preprint, submitted February 17, https://doi.org/10.2139/ssrn.4360165.Google Scholar