Accounting Quality And Feasibility Space Of Corporate Investment

In this paper, we select833A-share listed companies from2002to2011,which are listed in Shanghai or Shenzhen Stock Exchange. In order to test thecorrelation of accounting quality and feasibility space of corporateinvestment, we use the large sample empirical research. Meanwhile, weanalyze the influence of external financing demands, equity concentrationand share segregation reform. The research shows that the quality ofaccounting information and the feasibility space of corporate investmentpositively correlates. According to agency theory, information asymmetrictheory and signal transmission theory, the higher the accounting quality, thelower agency costs and information asymmetry. So companies can be morecompetitive in the product markets, factor markets and capital markets. As aresult, the investment feasibility space will become bigger. In addition,companies that not demand external financing or before equity segregationreform are less likely to disclose high-quality accounting information. So the investment feasibility space is reduced. We also find that the higher theequity concentration, the more willing to disclose high-quality accountinginformation and the bigger the investment feasibility space. However, if theequity is too centralized or decentralized, companies will be reluctant todisclose high-quality accounting information, which leading to reducedinvestment feasibility space.