Increased disclosure and investment efficiency

Shu Miao Lai, Chih Liang Liu*, Taychang Wang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

13 Scopus citations


This paper investigates the relation between increased disclosure level and capital investment efficiency. We hypothesize that increased disclosure level can reduce information asymmetry, which in turn improves capital investment efficiency. Consistent with our hypothesis, we document a significantly negative association between disclosure level and measures of inefficient investments, such as level of investment inefficiency, overinvestment, and underinvestment, indicating that firms increased disclosure level are found to improve investment efficiency. These results are robustness after using various measures for level of investment inefficiency and increased disclosure and considering different types of disclosure such as voluntary disclosure. Overall, our findings suggest that through reducing information asymmetry, increased disclosure level induces managers to act in the best interest of shareholders, which improves capital investment efficiency.

Original languageEnglish
Pages (from-to)308-327
Number of pages20
JournalAsia-Pacific Journal of Accounting and Economics
Issue number3
StatePublished - Jul 2014


  • capital investment
  • disclosure
  • investment efficiency
  • transparency

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