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Information Quality and Endogenous Project Outcomes
Author(s) -
Deng Mingcherng,
Nan Lin,
Wen Xiaoyan
Publication year - 2019
Publication title -
contemporary accounting research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.769
H-Index - 99
eISSN - 1911-3846
pISSN - 0823-9150
DOI - 10.1111/1911-3846.12459
Subject(s) - quality (philosophy) , outcome (game theory) , business , finance , microeconomics , industrial organization , economics , philosophy , epistemology
In this study, we show that when a firm needs external financing, information quality has real effects via financing contracts on the firm's input to influence its operational outcome. Interestingly, we find that higher information quality decreases overall efficiency. Our analysis highlights the importance of considering the role of information quality in the presence of the firm's input decision upon financing contracts. In particular, information quality has a feedforward effect on the firm's real input decision via financing contracts, which in turn has a feedback effect on financing contracts and overall efficiency.