Mengjie Huang’s Insight into Internal Information Quality and the Sensitivity of Investment to Market Prices and Accounting Profits
Assistant Professor Mengjie Huang’s co-authored article, “Internal Information Quality and the Sensitivity of Investment to Market Price and Accounting Profits,” appears in the November 2018 volume of Contemporary Accounting Research. The paper examines whether the quality of internal information matters for investment decisions. Consistent with recent theoretical and empirical research, they represent internal information quality by using observable information properties. The authos find that the sensitivity of investment to profitability is increasing, while the sensitivity of investment to market‐to‐book value is decreasing in internal information quality. Their focus on internal information and decision-making offers new and unique insights on the importance of information quality and complements the growing literature on the role of external reporting quality in reducing financing frictions.