Uncertainty, Corporate Investment and the Role of Conservative Financial Reporting: Empirical Evidence from Pakistan

• 발행기관: 한국유통과학회
• 저자명: Huma FATIMA Sahar Latif RANA Abida HAFEEZ
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 9 No.6, 231~243쪽, 전체 13쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2022.06.30

영문 초록

The objective of this study is to analyze the impact of conservative financial reporting on investment during uncertainty. It was assumed that during uncertainty conservative financial reporting can play an important role to improve investment decision-making. For our analysis, data sets from 2005–2020 of nonfinancial companies are used. To measure the impact of conservative financial reporting in the non-financial sector of Pakistan, Khan and Watts’ (2009) model is applied. “Prospector” and “Defender” Business strategy is applied for measuring firmlevel uncertainty. Investment is measured by adding the change in fixed assets (property, plant, and equipment). To check the robustness of conservative financial reporting, Givoly and Hayn’s (2000) Negative Accruals measure is applied. To measure the robustness of uncertainty, environmental scanning and alertness technique is applied. According to environmental scanning and alertness technique, companies are divided into two groups named ‘inert’ and ‘alert’. ‘Inert’ are those firms that are not scanning their environment, and ‘alert’ are those firms who continuously analyze their environment. The empirical estimations support our hypothesis. The empirical findings provide the proof that in the wake of uncertainty conservative financial reporting may facilitate to take optimal investment decisions in the developing economy of Pakistan. Our results provide critical and practical implications for investors, researchers, and standard setters.

목차

1. Introduction

2. Theoretical Background

3. Material and Methods

4. Empirical Results

5. Conclusion

References

키워드

Conservatism Investment Uncertainty Business Strategy