The influence of Accounting Information Quality on Investment Decisions: Investor Perspective in the Capital Market

Putu Saroyini Piartrini; PA Andiena Nindya Putri

doi:10.38035/dijefa.v5i1.2453

Authors

Putu Saroyini Piartrini Universitas Udayana, Denpasar, Indonesia
PA Andiena Nindya Putri ITB Stikom Bali, Bali, Indonesia

DOI:

https://doi.org/10.38035/dijefa.v5i1.2453

Keywords:

Accounting Information Quality, Investment Decisions, Investor Perspective, Capital Market.

Abstract

This article delves into the critical role of accounting information quality in shaping investment decisions from the perspective of investors in the capital market. The research aims to explore how the quality of accounting information impacts the decision-making processes of investors, particularly in terms of assessing investment opportunities and managing risks. A comprehensive literature review is conducted to analyze previous studies and theories related to accounting information quality, investment decisions, and investor behavior. The findings suggest that high-quality accounting information positively influences investors' ability to evaluate investment options accurately, enhances transparency, reduces information asymmetry, and fosters confidence in financial markets. Conversely, poor-quality accounting information can lead to misinformed decisions, increased uncertainty, and potential financial losses for investors. The implications of these findings highlight the significance of reliable and transparent financial reporting practices in facilitating informed investment decisions and promoting efficiency in capital markets.

References

Abdul kareem, A. A., Fayed, Z. T., Rady, S., Amin El-Regaily, S., & Nema, B. M. (2023). Factors Influencing Investment Decisions in Financial Investment Companies. Systems, 11(3), 146. https://doi.org/10.3390/systems11030146

Abed, I. A., Hussin, N., Ali, M. A., Haddad, H., Shehadeh, M., & Hasan, E. F. (2022). Creative Accounting Determinants and Financial Reporting Quality: Systematic Literature Review. Risks, 10(4), 76. https://doi.org/10.3390/risks10040076

Al Lawati, H., & Sanad, Z. (2023). Ownership Concentration and Audit Actions. Administrative Sciences, 13(9), 206. https://doi.org/10.3390/admsci13090206

Al Natour, A. R., Meqbel, R., Kayed, S., & Zaidan, H. (2022). The Role of Sustainability Reporting in Reducing Information Asymmetry: The Case of Family- and Non-Family-Controlled Firms. Sustainability, 14(11), 6644. https://doi.org/10.3390/su14116644

Alduais, F., Alsawalhah, J., & Almasria, N. A. (2023). Examining the Impact of Corporate Governance on Investors and Investee Companies: Evidence from Yemen. Economies, 11(1), 13. https://doi.org/10.3390/economies11010013

Alsayegh, M. F., Ditta, A., Mahmood, Z., & Kouser, R. (2023). The Role of Sustainability Reporting and Governance in Achieving Sustainable Development Goals: An International Investigation. Sustainability, 15(4), 3531. https://doi.org/10.3390/su15043531

Bhimavarapu, V. M., Rastogi, S., & Abraham, R. (2022). The Influence of Transparency and Disclosure on the Valuation of Banks in India: The Moderating Effect of Environmental, Social, and Governance Variables, Shareholder Activism, and Market Power. Journal of Risk and Financial Management, 15(12), 612. https://doi.org/10.3390/jrfm15120612

Binh, N. T. T., & Lee, H.-C. (2024). Unveiling the Impacts of Corporate Environmental, Social, and Governance Disclosure. Sustainability, 16(6), 2459. https://doi.org/10.3390/su16062459

Diantaris, M.T.A. (2024, February 10). Unlocking Financial Success: How High-Quality Accounting Information Influences Investment Choices. The Jurnals. Retrieved from https://jurnals.net/unlocking-financial-success-how-high-quality-accounting-information-influences-investment-choices/

Dratwi?ska-Kania, B., Ferens, A., & Kania, P. (2023). Transparent Reporting on Financial Assets as a Determinant of a Company’s Value—A Stakeholder’s Perspective during the SARS-CoV-2 Pandemic and beyond. Sustainability, 15(3), 2065. https://doi.org/10.3390/su15032065

Faccia, A., McDonald, J., & George, B. (2024). NLP Sentiment Analysis and Accounting Transparency: A New Era of Financial Record Keeping. Computers, 13(1), 5. https://doi.org/10.3390/computers13010005

Gardi, B., Aga, M., & Abdullah, N. N. (2023). Corporate Governance and Financial Reporting Quality: The Mediation Role of IFRS. Sustainability, 15(13), 9869. https://doi.org/10.3390/su15139869

Harinurdin, E. (2022). The Influence of Financial Ratio and Company Reputation on Company Stock Prices Financial Sector. Proceedings, 83(1), 47. https://doi.org/10.3390/proceedings2022083047

Huang, H.-L., Liang, L.-W., Chang, H.-Y., & Hsu, H.-Y. (2021). The Influence of Earnings Management and Board Characteristics on Company Efficiency. Sustainability, 13(21), 11617. https://doi.org/10.3390/su132111617

Kabara, A. S., Abdullah, D. F., Khatib, S. F. A., Bazhair, A. H., & Al Amosh, H. (2023). Moderating Role of Governance Regulatory Compliance on Board Diversity and Voluntary Disclosure of Non-Financial Firms in a Developing Country. Sustainability, 15(5), 4527. https://doi.org/10.3390/su15054527

Kashani, S. M., & Mousavi Shiri, M. (2022). The Role of Corporate Governance in Investment Efficiency and Financial Information Disclosure Risk in Companies Listed on the Tehran Stock Exchange. Journal of Risk and Financial Management, 15(12), 577. https://doi.org/10.3390/jrfm15120577

Koltay, T. (2020). Quality of Open Research Data: Values, Convergences and Governance. Information, 11(4), 175. https://doi.org/10.3390/info11040175

Lathief, J. T. A., Kumaravel, S. C., Velnadar, R., Vijayan, R. V., & Parayitam, S. (2024). Quantifying Risk in Investment Decision-Making. Journal of Risk and Financial Management, 17(2), 82. https://doi.org/10.3390/jrfm17020082

Liu, J., Cheng, Y., Li, X., & Sriboonchitta, S. (2022). The Role of Risk Forecast and Risk Tolerance in Portfolio Management: A Case Study of the Chinese Financial Sector. Axioms, 11(3), 134. https://doi.org/10.3390/axioms11030134

Mähönen, J. (2020). Comprehensive Approach to Relevant and Reliable Reporting in Europe: A Dream Impossible? Sustainability, 12(13), 5277. https://doi.org/10.3390/su12135277

Milone, V., & Pizzi, S. (2019). Managing the Complexity through New Forms of Financial Reporting: A Multiple Case Study on Italian Public Museums. Administrative Sciences, 9(4), 95. https://doi.org/10.3390/admsci9040095

Misiuda, M., & Lachmann, M. (2022). Investors’ Perceptions of Sustainability Reporting—A Review of the Experimental Literature. Sustainability, 14(24), 16746. https://doi.org/10.3390/su142416746

Morais, A. I., & Pinto, I. (2023). Does the Level of Enforcement Shape the Complexity in Accounting Standards? International Journal of Financial Studies, 11(1), 34. https://doi.org/10.3390/ijfs11010034

Mustafa Khan, N. J., & Mohd Ali, H. (2023). Regulations on Non-Financial Disclosure in Corporate Reporting: A Thematic Review. Sustainability, 15(3), 2793. https://doi.org/10.3390/su15032793

Pereira, C., Castro, B., Gomes, L., & Canha, H. (2024). Firms’ Investment Level and (In)Efficiency: The Role of Accounting Information System Quality. International Journal of Financial Studies, 12(1), 9. https://doi.org/10.3390/ijfs12010009

Pombinho, M., Fialho, A., & Novas, J. (2024). Readability of Sustainability Reports: A Bibliometric Analysis and Systematic Literature Review. Sustainability, 16(1), 260. https://doi.org/10.3390/su16010260

Rampelotto, P. H. (2023). A Critical Assessment of the Peer Review Process in Life: From Submission to Final Decision. Life, 13(7), 1603. https://doi.org/10.3390/life13071603

Salehi, M., Zimon, G., Arianpoor, A., & Gholezoo, F. E. (2022). The Impact of Investment Efficiency on Firm Value and Moderating Role of Institutional Ownership and Board Independence. Journal of Risk and Financial Management, 15(4), 170. https://doi.org/10.3390/jrfm15040170

Sheela, S., Alsmady, A. A., Tanaraj, K., & Izani, I. (2023). Navigating the Future: Blockchain’s Impact on Accounting and Auditing Practices. Sustainability, 15(24), 16887. https://doi.org/10.3390/su152416887

Stronczek, A. (2023). Barriers of Lean Accounting Implementation in Polish Enterprises: DEMATEL Approach. Sustainability, 15(15), 12008. https://doi.org/10.3390/su151512008

Tao, J., Shan, P., Liang, J., & Zhang, L. (2024). Influence Mechanism between Corporate Social Responsibility and Financial Sustainability: Empirical Evidence from China. Sustainability, 16(6), 2406. https://doi.org/10.3390/su16062406

Truong, L. D., Le, T. X., & Friday, H. S. (2022). The Influence of Information Transparency and Disclosure on the Value of Listed Companies: Evidence from Vietnam. Journal of Risk and Financial Management, 15(8), 345. https://doi.org/10.3390/jrfm15080345

Yu, Z. (2022). Financial Report Readability and Accounting Conservatism. Journal of Risk and Financial Management, 15(10), 454. https://doi.org/10.3390/jrfm15100454

Zabolotnyy, S., & Wasilewski, M. (2019). The Concept of Financial Sustainability Measurement: A Case of Food Companies from Northern Europe. Sustainability, 11(18), 5139. https://doi.org/10.3390/su11185139

Zadeh, F. N., Askarany, D., & Asl, S. A. (2022). Accounting Conservatism and Earnings Quality. Journal of Risk and Financial Management, 15(9), 413. https://doi.org/10.3390/jrfm15090413

Zhao, L., Naktnasukanjn, N., Dawod, A. Y., & Zhang, B. (2024). Impacts of Investor Attention and Accounting Information Comparability on Stock Returns: Empirical Evidence from Chinese Listed Companies. International Journal of Financial Studies, 12(1), 18. https://doi.org/10.3390/ijfs12010018

Zhou, D., Saeed, U. F., & Agyemang, A. O. (2024). Assessing the Role of Sustainability Disclosure on Firms’ Financial Performance: Evidence from the Energy Sector of Belt and Road Initiative Countries. Sustainability, 16(2), 930. https://doi.org/10.3390/su16020930

Zimon, G., Appolloni, A., Tarighi, H., Shahmohammadi, S., & Daneshpou, E. (2021). Earnings Management, Related Party Transactions and Corporate Performance: The Moderating Role of Internal Control. Risks, 9(8), 146. https://doi.org/10.3390/risks9080146