تخصص حسابرس، کیفیت اطلاعات حسابداری و بازده سرمایه گذاری
Highlights
Abstract
Graphical abstract
Keywords
1. Introduction
2. Literature review and hypothesis development
3. Research method and sample
4. Empirical results
5. Robustness analysis: causality effect
6. Conclusions
References
Abstract
This study is examined how the auditor specialization moderates the effect of accounting information quality on investment efficiency, i.e., whether the effect of accounting information quality on investment efficiency is increasing or decreasing with the presence of the specialist auditor. The reached result reveals that the accounting information quality appears to help decrease the overinvestment problem. Similarly, the auditor specialization has been discovered to help greatly in improving investment efficiency, while reducing the underinvestment problem. We further find that the accounting information quality and the auditor specialization are two mechanisms with some degree of substitution in enhancing investment efficiency. The accounting information quality is positively associated with investment efficiency for firms whose auditor is an industry specialist. In addition, to check the robustness of the main results, this paper investigates the causal relationships between investment efficiency, auditor specialization and accounting information quality from the dynamic simultaneous-equation models.
1. Introduction
A large theoretical and empirical literature examines the role of the accounting information quality (Bushman et al., 2001; Bushman and Smith, 2001; Bagaeva, 2008; Chan et al., 2009; Chan and Lee, 2009; Zhiying et al., 2012; Ran et al., 2015). One line of research (Biddle and Hilary, 2006; McNichols and Stubben, 2008; Biddle et al., 2009; Chen et al., 2011) suggests that higher quality information enables managers to identify better investment opportunities. Several studies also propose that auditor specialization can be used to reduce the information asymmetry problems (Almutairi et al., 2009; DeBoskey et al., 2012; DeBoskey and Jiang, 2012; Yaghoobnezhada et al., 2014): A specialist’s knowledge of the industry can be developed through vast auditing experience, specialized staff training, and large investments in information technology. This industry-specific knowledge allows specialist auditors to provide higher quality audit service by reducing the information asymmetry through their greater ability to detect significant anomalies. Theoretical models (Balsam et al., 2003; Lai, 2011) predict that, despite the limited evidence, a highly acquired audit quality is extremely useful for improving investment efficiencies, especially with respect to overinvestment. Based on these premises, the main purpose of this paper is to combine these two mechanisms and analyze the effect of the accounting information quality (AIQ) and the auditor specialization on investment efficiency. Chen et al. (2011), who examines the relationship between the information quality and investment, find that financial reporting quality enhances investment in private firms in emerging countries. We also expect to find this association in a sample of industrial firms. In relation to the role of the auditor specialization in investment efficiency, to the best of our knowledge, this is the first study that empirically examines its effect on both underinvestment and overinvestment. As an extension of our research, we examine how the auditor specialization moderates the AIQ effect on investment efficiency, i.e., whether such an AIQ effect on investment efficiency is increasing or decreasing with the presence of a specialist auditor. We could expect both effects: