Open Access


Research Article

Main Article Content

Nouha Khouficorresponding author


Accounting information quality has been said to play an important role in reducing information asymmetry. Thus, firms with high accounting information quality may enhance more investors’ decisions. This paper aims to empirically examine the association between accounting information quality and investment decisions among firms in Tunisia. The sample of this study consists of 50 firms listed on the Tunis Stock Exchange covering 2012 to 2016. The findings imply that accounting information quality is significantly negatively related to investment inefficiency. The inclusion of control variables and the use of alternative models to measure accounting information quality provide consistent findings. This paper has several important contributions. First, this paper provides new empirical evidence in an emerging market. Although emerging markets make up the vast majority of economic activity around the world, they have received limited attention in academic research. Second, this paper can also help researchers to better understand and realize the governance role of accounting information, and push them to investigate the other role of accounting information deeply and broadly.

accounting information quality, investment inefficiency, agency costs, financial constraint, asymmetry

Article Details

How to Cite
Khoufi, N. (2020). Accounting information quality and investment decisions in the emerging markets. Frontiers in Management and Business, 1(1), 16-23.


  1. Bushman R and Smith A. Financial accounting information and corporate governance. Journal of Accounting and Economics, 2003, 31: 237-333.
  2. Houcine A. The effect of financial reporting quality on corporate investment efficiency: Evidence from the Tunisian stock market. Research in International Business and Finance, 2017, 42: 321-337.
  3. Verdi RS. Financial reporting quality and investment efficiency, SSRN, eLibrary, 2006.
  4. Zhai J and Wang Y. Accounting information quality, governance efficiency and capital investment choice. China Journal of Accounting Research, 2016, 9(4): 251-266.
  5. Mirshekary S and Saudagaran SM. Perceptions and characteristics of financial statement users in developing countries: Evidence from Iran. Journal of International Accounting, Auditing and taxation, 2005, 15: 33-54.
  6. Chen F, Hope O, Li Q, et al. Financial reporting quality and investment efficiency of private firms in emerging markets. The Accounting Review, 2011, 86(4): 1255-1288.
  7. Li Q and Wang T. Financial reporting quality and corporate investment efficiency: Chinese experience. Nankai Business Review International, 2010, 1(2): 197-213.
  8. Healy P and Palepu K. Information Asymmetry, Corporate Disclosure, and the Capital Markets: a Review of the Empirical Disclosure Literature. Journal of Accounting and Economics, 2001, 31(1-3): 405-440.
  9. Jensen M. Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers. American Economic Review, 1986, 76(2): 323-329.
  10. Easley D and O’hara M. Information and the Cost of Capital. The Journal of Finance, 2004, 59(4): 1553-1583.
  11. Yee KK. Earning quality and the equity risk premium: A benchmark model. Contemporary Accounting Research, 2006, 23: 833-877.
  12. Lambert R. Contracting theory and accounting. Journal of Accounting and Economics, 2001, 32(1-3): 83-87.
  13. Suijs J. On the value relevance of asymmetric financial reporting policies. Journal of Accounting Research, 2008, 46(5): 1297-1321.
  14. Holmstrom B and Tirole J. Market liquidity and performance monitoring. Journal of Political Economy, 1993, 101: 678-709.
  15. Biddle G, Hilary G, Verdi R, et al. How Does Financial Reporting Quality Improve Investment Efficiency? Journal of Accounting and Economics, 2009, 48: 112-131.
  16. Dechow P, Ge W, Schrand C, et al. Understanding earnings quality: A review of the proxies, their determinants and their consequences. Journal of Accounting and Economics, 2010, 50: 344-401.
  17. Francis J, LaFond R, Olsson PM, et al. The market pricing of accruals quality. Journal of Accounting and Economics, 2005, 39(2): 295-327.
  18. Francis J, LaFond R, Olsson PM, et al. Cost of equity and earnings attributes. The Accounting Review, 2004, 79(4): 967-1010.
  19. Xu X, Wang X and Han N. Accounting Conservatism, Ultimate Ownership and Investment Efficiency, China Finance. Review International, 2012, 2(1): 53-77.
  20. Dichev I and Dechow P. The quality of accruals and earnings: the role of accrual estimation errors. The Accounting Review, 2002, 77: 35-59.
  21. McNichols M. Discussion of the Quality of Accruals and Earnings: the Role of Accrual Estimation Errors. The Accounting Review, 2002, 77: 61-69.
  22. Givoly D and Haynes C. The Changing Time-Series Properties of Earnings, Cash Flows and Accruals: Has Financial Accounting Become More Conservative? Journal of Accounting and Economics, 2000, 29(3): 287- 320.
  23. Ahmed A and Duellman S. Evidence on the Role of Accounting Conservatism in Monitoring Managers’ Investment Decisions. Accounting and Finance, 2011, 51(3): 609- 633.
  24. Kwon S, Yin J, Han J, et al. The Effect of Differential Accounting Conservatism on the Overvaluation of High-Tech relative to Low-Tech firms. Review of Quantitative Finance and Accounting, 2006, 27(2): 143-173.
  25. Verdi RS. Financial reporting quality and investment efficiency. SSRN eLibrary, 2006.
  26. Denis DJ. Investment opportunities and the market reaction to equity offerings. Journal of Financial and Quantitative Analysis, 1994, 29: 159-177.
  27. Myers S and Majluf N. Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 1984, 13: 187-221.
  28. Cameron A, Trivedi PK and Zimmer DM. Modelling the Differences in Counted Outcomes Using Bivariate Copula Models With Application to Mismeasured Counts. Econometrics Journal, 2004, 7: 566-584.
  29. Loukil N and Yousfi O. Firm’s information environment and stock liquidity: Evidence from Tunisian context. Journal of Accounting in Emerging Economies, 2012, 2(1): 30-49.