Financial report quality, debt maturity and investment efficiency - Evidence from listed companies on HCM stock exchange( Hose)
Abstract
Prior research shows that financial reporting quality is positively related to investment efficiency for firms in developed economies. However, it is not obvious whether this finding extends to companies in emerging and transitional markets (i.e., a very different environment characterized by low investor protection and enforcement). Employing the sample of listed firms in emerging market, this thesis studies the relations among financial report quality, debt maturity and investment efficiency for a sample of listed firms in Vietnam. In addition to examine the relation between financial report quality and investment efficiency, this thesis also studies the impact of short-term debt's level on the effectiveness of financial reporting quality on investment efficiency. Strong evidence shows that financial report quality and debt maturity positively affect investment efficiency and that relation is stronger for firms with lower use of short-term debt. Thus, financial report quality and higher use of short-term debt (lower maturity) is expected to play a substitute role in enhancing investment efficiency. This recommends that in firms with lower quality of reporting, debt maturity is the fundamental instrument which could be utilized to improve investment inefficiency.
Key words: Short-term Debts, Debt maturity, Financial Reporting Quality, Investment Efficiency