“Financial Information Quality across the Capital Markets Positioned at Different Levels of Development”                                   

Project Objectives:

The objective of this research project is to assess financial information quality for the capital markets positioned at different levels of development

Project activities and outcomes:

The quality of financial information attains a particular importance as it determines the efficiency of investments. Prior literature has revealed a positive link between the extent of capital market development and the quality of financial information. However, there is no systematic knowledge whether this positive relation increases or decreases as we shift from more towards less developed capital markets and/or vice versa. Understanding such – second-degree – relation would help investors to more precisely formulate their estimations on the trustiness of financial information across different capital markets. This is of particular importance for the underdeveloped economies where because of the data unavailability/unreliability and limited research capacity reasons investors are unaware at what extent to rely on the reported financial information. At a first stage, this research project will establish a capital market development rating for a more than 100 capital markets available at the World Bank database. As next, a firm-level comparative analysis across these capital markets will extrapolate how financial information quality alters across these markets. The study will cover the years of 2001-2015 and financial information quality matrix will be operationalized through its four large pillars: value relevance, time-series properties of earnings, earnings management and accounting conservatism.

Project starting and finishing dates: 01.02.2016 – present

Coordinator University: Caucasus University, Georgia

Principal Investigator: Prof. Dr. Erekle Pirveli