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Accounting quality and information asymmetry of foreign direct investment firms
Affiliation:1. Caritas Institute of Higher Education, 18 Chui Ling Road, Tseung Kwan O, New Territories, Hong Kong, China;2. Anderson School of Management, The University of New Mexico, Albuquerque, NM 87131, USA;1. School of Management, Cranfield University, Bedfordshire, MK43 OAL, UK;2. Southampton Business School, University of Southampton, United Kingdom;1. Nanyang Business School, Nanyang Technological University, Division of Banking and Finance, Singapore 639798, Singapore;2. Business School, University of Adelaide, 10 Pulteney Street, Adelaide 5005, Australia;3. Korea University Business School, Korea University, 145 Anam-ro, Seongbuk-gu, Seoul, Republic of Korea
Abstract:This study argues that the foreign direct investment firms mislead stakeholders and are associated with greater information asymmetry due to the raised agency problem. Results show that both earnings management and idiosyncratic volatility increase with foreign investment. Managerial ownership mitigates such inefficiency.
Keywords:Earnings management  Idiosyncratic risk  Foreign direct investment  Managerial ownership
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