The Nexus Between Accounting Transparency and Entrepreneurial Growth: Evidence from Emerging Markets
Keywords:
Accounting Transparency, Emerging Markets, Entrepreneurial Growth, Financial Reporting, Institutional FrameworksAbstract
The relationship between accounting transparency and entrepreneurial growth has become a central concern in sustainable business development, particularly in emerging markets. Transparent accounting practices are essential not only for ensuring compliance but also for building investor confidence, improving access to finance, and enhancing entrepreneurial decision-making. This study explores how accounting transparency influences entrepreneurial growth by examining its role in resource acquisition, stakeholder trust, and long-term performance. Evidence from literature reviews, secondary data, and case studies highlights that transparent reporting reduces information asymmetry, mitigates agency conflicts, and improves risk management—factors that are critical for entrepreneurial success. Entrepreneurs operating in contexts with stronger financial reporting standards and robust institutional frameworks are more likely to attract external investment, expand operations, and compete in global markets. By contrast, a lack of transparency weakens market efficiency, increases uncertainty, and limits growth opportunities. The findings further suggest that transparency supports the development of entrepreneurial ecosystems by strengthening relationships between entrepreneurs, investors, and regulators. For policymakers and business leaders in emerging economies, promoting transparency involves designing institutional mechanisms, legal safeguards, and support systems that foster accountability while encouraging entrepreneurship. Such initiatives can enhance financial discipline, enable fair competition, and stimulate innovation-driven growth. Ultimately, accounting transparency serves not only as a foundation for entrepreneurial growth but also as a catalyst for sustainable economic development. By improving trust, reducing risks, and aligning business practices with global standards, transparent financial reporting enhances competitiveness in emerging markets and ensures that entrepreneurs are better equipped to navigate uncertainty and achieve long-term success.
References
Autio, E., Nambisan, S., Thomas, L. D., & Wright, M. (2014). Digital affordances, spatial affordances, and the genesis of entrepreneurial ecosystems. Strategic Entrepreneurship Journal, 8(1), 1–17. https://doi.org/10.1002/sej.1179
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
Biddle, G. C., Hilary, G., & Verdi, R. S. (2009). How does financial reporting quality relate to investment efficiency? Journal of Accounting and Economics, 48(2–3), 112–131. https://doi.org/10.1016/j.jacceco.2009.09.001
Bruton, G. D., Ahlstrom, D., & Obloj, K. (2008). Entrepreneurship in emerging economies: Where are we today and where should the research go in the future. Entrepreneurship Theory and Practice, 32(1), 1–14. https://doi.org/10.1111/j.1540-6520.2007.00213.x
Bruton, G. D., Ahlstrom, D., & Puky, T. (2010). Institutional differences and the development of entrepreneurial ventures: A comparison of the United States and Latin America. Journal of International Business Studies, 41(2), 182–206. https://doi.org/10.1057/jibs.2009.83
Bushman, R. M., & Landsman, W. R. (2010). The pros and cons of regulating corporate reporting: A critical review of the arguments. Accounting and Business Research, 40(3), 259–273. https://doi.org/10.1080/00014788.2010.9663390
Bushman, R. M., & Smith, A. J. (2001). Financial accounting information and corporate governance. Journal of Accounting and Economics, 32(1–3), 237–333. https://doi.org/10.1016/S0165-4101(01)00027-1
Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signaling theory: A review and assessment. Journal of Management, 37(1), 39–67. https://doi.org/10.1177/0149206310388419
Creswell, J. W., & Creswell, J. D. (2018). Research design: Qualitative, quantitative, and mixed methods approaches (5th ed.). SAGE Publications.
Gujarati, D. N., & Porter, D. C. (2009). Basic econometrics (5th ed.). McGraw-Hill.
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2019). Multivariate data analysis (8th ed.). Cengage Learning.
Healy, P. M., & Palepu, K. G. (2001). Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature. Journal of Accounting and Economics, 31(1–3), 405–440. https://doi.org/10.1016/S0165-4101(01)00018-0
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
Khanna, T., & Palepu, K. (2010). Winning in emerging markets: A road map for strategy and execution. Harvard Business Press.
La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. W. (1998). Law and finance. Journal of Political Economy, 106(6), 1113–1155. https://doi.org/10.1086/250042
Spence, M. (1973). Job market signaling. Quarterly Journal of Economics, 87(3), 355–374. https://doi.org/10.2307/1882010
