Research On The Impact Of The Quality Of Earnings Information On Inefficient Investment

As one of the important financial decisions, investment plays a key role in the survival and development of listed companies. However, at the present stage, the investment efficiency of the Chinese listed companies is low, and the inefficient investment greatly affects the prospect and the market values of listed companies. Therefore, it is a hot issue that how to restrain inefficient investment and improve investment efficiency of listed companies for the practical and theoretical researchers. The recent literatures show that the quality of earnings information, on the one hand, it can affect the price of capital which belongs to the investors is willing to invest in listed companies; on the other hand, it can be as an important tool whcih plays a direct and indirect role in helping the investors to manage and control inefficient investment of the listed companies. However, the existing literatures rarely analyze the impact of the quality of earnings information on inefficiency investment. Therefore, this dissertation is based on the mechanism and the path of inefficient investment which are impacted by the quality of earnings information, it expands the research about the quality of earnings information on inefficient investment, and it also tests the impact of the quality of earnings information on inefficient investment, which can help to guide the scientific decision-making for the government departments, investors and listed companies. The specific contents of the research include:Firstly, this dissertation analyzes theoretically of the impact of the quality of earnings information on inefficient investment, and constructs the overall theoretical framework about the impact of the quality of earnings information on inefficient investment. Based on the capital pricing theory, corporate governance theory and signal transmission theory and other related theories, this dissertation uses the methods of the literature research and normative analysis to explain the impact of the quality of earnings information on inefficient investment. In the theoretical analysis, this dissertation analyzes the mechanism and conduction path of the impact of the quality of earnings information on inefficient investment, based on the signal transmission theory and from two-dimensional perspective of investment ability and investment willingness, and based on the analysis of the direct impact of the quality of earnings information on inefficient investment, this dissertation useing financing constraints and agency conflicts from the two single path and the dual paths to analyze the indirect impact of the quality of earnings information on inefficient investment.Secondly, based on the theory of signal transmission in information economics, this dissertation builds a dynamic theory model of the quality of earnings information on inefficient investment, it analyzes the impact of the quality of earnings information on inefficient investment from the mathematical logic, and it finds that the quality of earnings information impacts on inefficient investment through reducing the probability error of capital pricing and improving the ability of the investors to supervise and motivate the managers of listed companies and the feedback effects of the stock price or bond price in the capital market which can reduces underinvestment and restrains overinvestment, in oder to reduce the inefficient investment and improve investment efficiency of listed companies; further, it tests empirically the direct impact of the quality of earnings information on inefficient investment, and the results show that the quality of earnings information can significantly inhibit inefficient investment, and the specific performance of the quality of earnings information can significantly reduce underinvestment and restrain overinvestment, which builds the foundation to study the intermediary effects of the quality of earnings information on inefficient investment under the different paths.Thirdly, based on the single perspective of investment ability and investment willingness, this dissertation analyzes the indirect effects of the quality of earnings information on inefficient investment under the single path of financing constraints and agency conflicts, constructs the corresponding empirical models, and tests respectively the indirect effects of the quality of earnings information on inefficient investment under the single path of financing constraints and agency conflicts, the results show that financing constraints and agency conflicts play a part of the intermediary effect in the quality of earnings information on inefficient investment, and futher finds that financing constraints and agency conflicts play a part of the intermediary effect in the quality of earnings information on underinvestment and overinvestment companies, and also finds that financing constraints plays a stronger part of the intermediary effect in the quality of earnings information on underinvestment than it plays a part of the intermediary effect in the quality of earnings information overinvestment, agency conflicts plays a stronger part of the intermediary effect in the quality of earnings information on overinvestment than it plays a part of the intermediary effect in the quality of earnings information underinvestment.Finally, based on the comprehensive effects of financing constraints and agency conflicts on inefficient investment, this dissertation analyzes the total indirect effects of the quality of earnings information on inefficient investment under the duals paths of financing constraints and agency conflicts, constructs the corresponding empirical models, and the results show that both financing constraints and agency conflicts play a double role in the quality of earnings information on inefficient investment. Contrasting the intermediary effect of specific path, for the full samples, agency conflicts plays a stronger part of the intermediary effect in the quality of earnings information on inefficient investment than financing constraints; for the underinvestment samples, financing constraints plays a stronger part of the intermediary effect in the quality of earnings information on underinvestment than agency conflicts; for the overinvestment samples, agency conflicts plays a stronger part of the intermediary effect in the quality of earnings information on overinvestment than financing constraints.Domestic and foreign scholars study the accounting information quality or financial reporting quality on inefficient investment mostly based on the direct static perspective, but little research on the quality of earnings information which is the most concerned by the investors on inefficient investment from the dynamic perspective. Based on the theory of information economics, this dissertation studies the direct impact of the quality of earnings information on inefficient investment, this dissertation also studies the indirect impact of the quality of earnings information on inefficient investment under the single path of financing constraints and agency conflict and the dual paths of financing constraints and agency conflict. This research has strong theoretical and practical significance. In theory, this research can provide a theoretical basis for further study of the quality of earnings information on inefficient investment, it is helpful to reveal the influence mechanism and the effects of the quality of earnings information on inefficient investment, it is helpful to broaden the application field of the research on the impact of the quality of earnings information on inefficient investment, and also it can enrich and develop the related literatures about information disclosure and corporate governance. In practice, this research is helpful for the government policy-making and supervision departments to formulate scientific information disclosure system, to promote listed companies improves the quality of earnings information, to develop scientific supervision system to improve the supervision ability of listed companies and develop scientific capital market financing system to broaden the financing channels of listed companies; it is helpful for the investors to make reasonable investment decisions based on the quality of earnings information and to enhance investment returns; and it is helpful to improve the quality of earnings information and the level of corporate governance to reduce inefficient investment and improve investment efficiency of listed companies.