On Wednesday, Oct 28th, 11 am ET, we will be joined by Gilles Hilary (HEC Paris) and Rodrigo Verdi (MIT). They will be discussing their paper, entitled “How Does Financial Reporting Quality Relate to Investment Efficiency?

The paper is co-authored with Gary Biddle at the University of Hong Kong.

The abstract of their paper reads:

“Prior evidence that higher quality financial reporting improves capital investment efficiency leaves unaddressed whether it reduces over- or under-investment. This study provides evidence of both in documenting a conditional negative (positive) association between financial reporting quality and investment for firms operating in settings more prone to over-investment (under-investment). Firms with higher financial reporting quality also are found to deviate less from predicted investment levels and show less sensitivity to macroeconomic conditions. These results suggest that one mechanism linking reporting quality and investment efficiency is a reduction of frictions such as moral hazard and adverse selection that hamper efficient investment.”

I am looking forward to hearing them discuss their paper. Be sure to join us on Wednesday!

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