Accounting quality and information asymmetry of foreign direct investment firms

摘要

Highlights•This study uses data from Taiwan to investigate the accounting quality and information asymmetry of foreign direct investment firms.•FDI firms are found to engage more in earnings management and have more information asymmetry.•Managerial ownership, an internal governance mechanism, can improve accounting quality and information asymmetry.AbstractThis study argues that the foreign direct investment firms mislead stakeholders and are associated with greater information asymmetry due to the raised agency problem. Results show that both earnings management and idiosyncratic volatility increase with foreign investment. Managerial ownership mitigates such inefficiency.