The Effect of Accounting Information Quality on Capital Market Development and Investor Confidence Levels

Posted: Mar 24, 2025

• Mia Hernandez
• Mia Ramirez
• Mia Roberts

Abstract

The quality of accounting information represents a fundamental pillar of modern capital markets, serving as the primary mechanism through which market participants assess corporate performance, allocate resources, and make investment decisions. While the theoretical relationship between accounting information quality and market outcomes has been extensively discussed in financial literature, empirical evidence remains fragmented and methodologically constrained. Traditional approaches have predominantly focused on quantitative metrics of accounting quality, such as earnings management indicators, accrual quality, and compliance with accounting standards, while largely neglecting the qualitative dimensions of financial reporting that may exert equally significant influences on market development and investor behavior. This research addresses critical gaps in the existing literature by developing and implementing a novel methodological framework that captures both quantitative and qualitative dimensions of accounting information quality.