Earnings Quality and Investment Efficiency: An Analysis of Electricity Companies Listed in B3

Costa, E; Fernandes, Thaynara Pietro; Silva, Josimar Pires da; Noriller, Rafael Martins

doi:10.12819/2021.18.4.3

RFSA

2021

DOI: 10.12819/2021.18.4.3

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Earnings Quality and Investment Efficiency: An Analysis of Electricity Companies Listed in B3

E Costa

Thaynara Pietro Fernandes²,

Josimar Pires da Silva

et al.

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“…In view of this, this improvement in the financial information allows solving the problems of overinvestment or underinvestment in projects of companies (Hope & Thomas, 2008;Biddle & Hilary, 2006). In this context, Costa et al (2021) suggest that the quality of financial reporting improve the investment efficiency.…”

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The relationship between investment and accounting conservatism: a study applied to small and medium-sized Portuguese companies

Pereira¹,

Monteiro²,

Pereira³

et al. 2023

RC&C, Rev. Contab. Control.

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Conservatism has been present in accounting practice for a long time. Currently, the dichotomy between historical cost and fair value or between the qualitative characteristic of relevance and reliability motivate further research. Thus, in this paper we analyse whether the level of investment on plant, property and equipment affects conditional conservatism in Portuguese small and medium-sized entities over the period from 2014 to 2018. The study was based on the econometric model proposed by Ball and Shivakumar (2005). The results indicate that these firms in general do not opt for conservative accounting practices. However, firms that report investment activities tend to be more conservative aiming at capturing investors' confidence. Furthermore, the empirical evidence does not allow us to conclude that problem of underinvestment and overinvestment of firms is mitigated through accounting conservatism, therefore the association of investment and conservatism tends not to be linear. This study contributes to the debate on the relevance of conservative accounting practice at the level of investment decisions.

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mentioning

confidence: 99%

The relationship between investment and accounting conservatism: a study applied to small and medium-sized Portuguese companies

Pereira¹,

Monteiro²,

Pereira³

et al. 2023

RC&C, Rev. Contab. Control.

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Firms’ Investment Level and (In)Efficiency: The Role of Accounting Information System Quality

Pereira,

Castro,

Gomes

et al. 2024

IJFS

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We investigate whether accounting information system quality has an impact on the level and efficiency of firms’ investments. While firms’ growth depends on investment and financing decisions, accounting information is fundamental for the decision-making of several stakeholders. We assess the accounting information system quality by discretionary accruals, whereas the investment inefficiency is estimated by the residuals of an investment regression for a sample of 3073 Portuguese SMEs from 27 industries, over the period from 2016 to 2021 using a panel regression analysis. The empirical evidence suggests that firms exhibiting higher accounting information system quality tend to invest more. In addition, firms with a lower accounting information system quality have more inefficient investments, as they tend to engage in more overinvestment, although this is not significant for underinvestment. Therefore, this study provides new evidence regarding the impact of accounting information systems on investment that may be useful for several stakeholders, such as managers, creditors, regulators, and academics, by providing evidence for SMEs, where empirical studies are scarce.

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Earnings Quality and Investment Efficiency: An Analysis of Electricity Companies Listed in B3

Cited by 2 publications

References 0 publications

The relationship between investment and accounting conservatism: a study applied to small and medium-sized Portuguese companies

The relationship between investment and accounting conservatism: a study applied to small and medium-sized Portuguese companies

Firms’ Investment Level and (In)Efficiency: The Role of Accounting Information System Quality

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