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Research on the Relation between Accounting Information Quality and Over-investment |
YUAN Jian-Guo, JIANG Yu-Feng, CAI Yan-Fang |
Huazhong University of Science and Technology, Wuhan, China |
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Abstract Taken the data from listed companies of manufacturing industry in China during 2004~2006 as a sample, the relation between accounting information quality and over-investment was studied empirically. It is found that accounting information quality is negatively corrected with firm over-investment and high quality accounting information can prevent over-investment. Further, accounting information quality is more closely associated with over-investment for firms with more free cash flow, which implicates that improving quality of accounting information could prevent over-investment of these firms.
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Received: 30 July 2008
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