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Does Corporate Transparency Contribute to Efficient Resource Allocation?

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  • JERE R. FRANCIS
  • SHAWN HUANG
  • INDER K. KHURANA
  • RAYNOLDE PEREIRA

Abstract

ABSTRACT This paper examines whether a country's corporate transparency environment, which includes the quality of accounting information, contributes to efficient resource allocation. Based on a cross-country study of 37 manufacturing industries in 37 countries, we provide three pieces of related evidence. First, we find the contemporaneous correlations in industry growth rates across country pairs are higher when there is a greater level of corporate transparency in the country pairs, after controlling for country-level economic and financial development. Second, we find the influence of transparency on these correlations is stronger when country pairs are at similar levels of economic development (GDP). Finally, when we control for the level of transparency explained by a country's institutions in place, we find that residual transparency (unexplained by country-level factors) is associated with industry-specific growth rates. Taken together, the results are consistent with corporate transparency facilitating the allocation of resources across industry sectors. Copyright (c), University of Chicago on behalf of the Accounting Research Center, 2009.

Suggested Citation

  • Jere R. Francis & Shawn Huang & Inder K. Khurana & Raynolde Pereira, 2009. "Does Corporate Transparency Contribute to Efficient Resource Allocation?," Journal of Accounting Research, Wiley Blackwell, vol. 47(4), pages 943-989, September.
  • Handle: RePEc:bla:joares:v:47:y:2009:i:4:p:943-989
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    Cited by:

    1. Nicola Giuseppe Castellano & Katia Corsi & Roberto Del Gobbo, 2015. "Goodwill Disclosure in Europe. Profiles of disclosing companies," Eastern European Business and Economics Journal, Eastern European Business and Economics Studies Centre, vol. 1(2), pages 32-65.
    2. Frederick Lindahl & Hannu Schadéwitz, 2013. "Are Legal Families Related to Financial Reporting Quality?," Abacus, Accounting Foundation, University of Sydney, vol. 49(2), pages 242-267, June.
    3. repec:eee:corfin:v:45:y:2017:i:c:p:687-709 is not listed on IDEAS
    4. repec:kap:iecepo:v:15:y:2018:i:1:d:10.1007_s10368-017-0372-8 is not listed on IDEAS
    5. Lightfoot, Geoffrey & Wisniewski, Tomasz, 2014. "Information Asymmetry and Power in a Surveillance Society," MPRA Paper 53109, University Library of Munich, Germany.
    6. Badia, Marc & Duro, Miguel & Jorgensen, Bjorn N. & Ormazabal, Gaizka, 2017. "Market-wide Effects of Off-Balance Sheet Disclosures:," CEPR Discussion Papers 12152, C.E.P.R. Discussion Papers.
    7. repec:eeb:15v1n2:v:1:y:2015:i:2:p:32-65 is not listed on IDEAS
    8. repec:eee:jeborg:v:136:y:2017:i:c:p:91-106 is not listed on IDEAS

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