Does Corporate Transparency Contribute to Efficient Resource Allocation

Jere R. Francis, Xiaochuan Huang, Inder K. Khurana, Raynolde Pereira

Research output: Contribution to journalArticle

35 Citations (Scopus)

Abstract

This paper examines whether a country's corporate transparency environment, which includes the quality of accounting information, contributes to efficient resource allocation. Based on a cross-country study of 37 manufacturing industries in 37 countries, we provide three pieces of related evidence. First, we find the contemporaneous correlations in industry growth rates across country pairs are higher when there is a greater level of corporate transparency in the country pairs, after controlling for country-level economic and financial development. Second, we find the influence of transparency on these correlations is stronger when country pairs are at similar levels of economic development (GDP). Finally, when we control for the level of transparency explained by a country's institutions in place, we find that residual transparency (unexplained by country-level factors) is associated with industry-specific growth rates. Taken together, the results are consistent with corporate transparency facilitating the allocation of resources across industry sectors.

Original languageEnglish (US)
Pages (from-to)943-989
Number of pages47
JournalJournal of Accounting Research
Volume47
Issue number4
DOIs
StatePublished - Sep 2009
Externally publishedYes

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Resource allocation
Transparency
Corporate transparency
Industry
Economic development
Factors
Accounting information
Manufacturing industries
Resources
Contemporaneous correlation
Financial development
Cross-country study

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

Cite this

Does Corporate Transparency Contribute to Efficient Resource Allocation. / Francis, Jere R.; Huang, Xiaochuan; Khurana, Inder K.; Pereira, Raynolde.

In: Journal of Accounting Research, Vol. 47, No. 4, 09.2009, p. 943-989.

Research output: Contribution to journalArticle

Francis, Jere R. ; Huang, Xiaochuan ; Khurana, Inder K. ; Pereira, Raynolde. / Does Corporate Transparency Contribute to Efficient Resource Allocation. In: Journal of Accounting Research. 2009 ; Vol. 47, No. 4. pp. 943-989.
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