TY - JOUR
T1 - Linguistic Information Quality in Customers’ Forward-Looking Disclosures and Suppliers’ Investment Decisions
AU - CHEN, Can
AU - KIM, Jeong-Bon
AU - WEI, Minghai
AU - ZHANG, Hao
N1 - Research Unit(s) information for this publication is provided by the author(s) concerned.
PY - 2019
Y1 - 2019
N2 - This study examines whether and how linguistic information quality (measured by readability) of customer firms' management earnings forecast reports (MEFRs) affects supplier firms' investment quality (measured by investment efficiency). Our analyses reveal that supplier investment efficiency is positively associated with the average linguistic information quality of customers' prior MEFRs, and the positive association between supplier investment efficiency and customer MEFRs' numerical information quality is stronger in supplier firms with more readable customer MEFRs. Our analyses also reveal that higher linguistic information quality of customer MEFRs improves the monitoring of supplier firms by their outside stakeholders such as institutional investors and financial analysts, and ameliorates the negative impact of suppliers' customer‐dependence on their investment efficiency. Our results suggest that greater linguistic information quality of a customer firm's forward‐looking disclosures is associated with higher‐quality investments made by its suppliers along the supply chain. © CAAA
AB - This study examines whether and how linguistic information quality (measured by readability) of customer firms' management earnings forecast reports (MEFRs) affects supplier firms' investment quality (measured by investment efficiency). Our analyses reveal that supplier investment efficiency is positively associated with the average linguistic information quality of customers' prior MEFRs, and the positive association between supplier investment efficiency and customer MEFRs' numerical information quality is stronger in supplier firms with more readable customer MEFRs. Our analyses also reveal that higher linguistic information quality of customer MEFRs improves the monitoring of supplier firms by their outside stakeholders such as institutional investors and financial analysts, and ameliorates the negative impact of suppliers' customer‐dependence on their investment efficiency. Our results suggest that greater linguistic information quality of a customer firm's forward‐looking disclosures is associated with higher‐quality investments made by its suppliers along the supply chain. © CAAA
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U2 - 10.1111/1911-3846.12471
DO - 10.1111/1911-3846.12471
M3 - RGC 21 - Publication in refereed journal
SN - 0823-9150
VL - 36
SP - 1751
EP - 1783
JO - Contemporary Accounting Research
JF - Contemporary Accounting Research
IS - 3
ER -