Study On The Influence Of Earnings Quality On Investment Efficiency And Its Path

Investment activities are key economic activities for companies to create value and increase wealth.It is the basis for companies to obtain continuous cash flow.However,the low investment efficiency of listed companies in China has greatly affected their profit prospects and market value.Therefore,how to improve the investment efficiency of listed companies has become a hot issue in theory and practice.The literature shows that high-quality earnings information can improve investment efficiency.However,the existing literature seldom analyzes the effect of earnings quality of listed companies on investment efficiency and its mechanism.Therefore,based on the mechanism and path of earnings quality affecting investment efficiency,this thesis expands the research ideas of earnings quality affecting investment efficiency and provides guidance to government on policies formulation and stakeholders on scientific decision making.The thesis is divided into three parts.Firstly,the effect of earnings quality of listed companies on investment efficiency is analyzed theoretically.In the theoretical analysis,the thesis explains the mechanism of the effect of earnings quality on investment efficiency,and analyzes the effect of earnings quality on investment efficiency from the angles of financing constraints and agency conflicts.Then,based on the above theory,we put forward the hypotheses that improving earnings quality leads to higher investment efficiency;financing constraints and agency conflicts are involved as intermediate factors in above relationship.An empirical analysis model is established to test the effect of earnings quality on investment efficiency by using 5,992 samples in total from 2013 to 2017 of listed companies in China,and the role of financing constraints and agency conflicts in the impact of earnings quality on investment efficiency is also tested.The empirical results show that there is a positive relationship between earnings quality and investment efficiency,a reverse relationship between earnings quality and problems of underinvestment and overinvestment.Therefore,it follows that financing constraints and agency conflicts play an intermediary role in the impact of earnings quality on investment efficiency.Based on the conclusion of the thesis,enterprises can consider transforming the action of improving earnings quality into a self-motivated behavior and investors can also properly use the earnings information in the capital market to understand the corporate performance and profitability,agency conflicts and other related circumstances.Moreover,investors can make scientific and reasonable investment decision and reduce investor investment risk.