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The Link between Information Transparency and Investment Efficiency: A Literature Review

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  • Thi Thanh Huyen Le

Abstract

Investigating the role of information has been recently a hot topic attracting many researchers. A large number of studies have examined the effect of information on cost of capital (Christine A. Botosan, 1997; Diamond & Verrecchia, 1991; Easley & O¡¯Hara, 2004), stock price (Welker, 1995), and stock liquidity (Leuz & Wysocki, 2008). It is demonstrated that the increase in both quantity and quality of information brings benefits to firms as well as the capital markets (Healy & Palepu, 2001). More specifically, many studies indicate the beneficial influence of information disclosure in improving the efficiency of firm investments (Biddle & Hilary, 2006; Biddle, Hilary, & Verdi, 2009; Cheng, Dhaliwal, & Zhang, 2013; Gomariz & Ballesta, 2014; Lai, Liu, & Wang, 2014). This paper presents a review of literature about the relation between information transparency and firms¡¯ investment efficiency.

Suggested Citation

  • Thi Thanh Huyen Le, 2018. "The Link between Information Transparency and Investment Efficiency: A Literature Review," Business and Economic Research, Macrothink Institute, vol. 8(4), pages 71-79, December.
    • Handle: RePEc:mth:ber888:v:8:y:2018:i:4:p:71-79
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    References listed on IDEAS

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    1. Biddle, Gary C. & Hilary, Gilles & Verdi, Rodrigo S., 2009. "How does financial reporting quality relate to investment efficiency?," Journal of Accounting and Economics, Elsevier, vol. 48(2-3), pages 112-131, December.
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    5. Richard Lambert & Christian Leuz & Robert E. Verrecchia, 2007. "Accounting Information, Disclosure, and the Cost of Capital," Journal of Accounting Research, Wiley Blackwell, vol. 45(2), pages 385-420, May.
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    14. Young Jun Cho, 2015. "Segment Disclosure Transparency and Internal Capital Market Efficiency: Evidence from SFAS No. 131," Journal of Accounting Research, Wiley Blackwell, vol. 53(4), pages 669-723, September.
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    Keywords

    Disclosure; Investment efficiency;

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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