Impact of information environment on investment efficiency among Vietnamese listed firms

Abstract

This paper investigates the impact of the information environment on investment efficiency among listed firms in Vietnam. This purpose is accomplished by constructing a model according to Biddle et al. (2009) and regressing this model with a sample of 531 Vietnamese non-financial listed firms. The results show that both internal and external information environments improve investment efficiency. The positive impact of the information environment on investment efficiency is materialized by reducing over-and under-investment. As measured by financial reporting quality, the internal information environment enhances investment efficiency by providing timely access to valuable financial information and improving internal transparency. The external information environment proxied by the information transparency index benefits investment efficiency by mitigating information asymmetry, allowing firms to disclose relevant information and incorporate new developments into their business plans. These findings highlight the importance of fostering effective information environments to optimize investment decisions.