The Effect of Accounting Conservatism on Investment Efficiency and Debt Financing: Evidence From Egyptian Listed Companies

Hala Abd-Elnaby, Ola Aref

Abstract


This paper examines the effect of accounting conservatism on investment efficiency by examining whether conservatism reduces overinvestment and underinvestment problems. Additionally, examining whether conservatism mitigates underinvestment problem by raising debt financing. The paper sample covers a period of five years from 2012 to 2016, including 57 Egyptian firms. The results show a negative relationship between conservatism and over (under)investment, implying that there is a positive association between conservatism and investment efficiency. Furthermore, there is a positive relationship between conservatism and debt financing in firms suffering from underinvestment problems. Hence, accounting conservatism is crucial for improving the quality of financial information.


Full Text:

PDF


DOI: https://doi.org/10.5296/ijafr.v9i2.14557

Refbacks

  • There are currently no refbacks.


Copyright (c) 2019 International Journal of Accounting and Financial Reporting



International Journal of Accounting and Financial Reporting  ISSN 2162-3082

Copyright © Macrothink Institute 

'Macrothink Institute' is a trademark of Macrothink Institute, Inc.

To make sure that you can receive messages from us, please add the 'macrothink.org' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.