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Article
Publication date: 27 June 2008

H. Young Baek, Dong‐Kyoon Kim and Joung W. Kim

The aim of this paper is to investigate the effect of management earnings forecasts on the level of information asymmetry around subsequent earnings announcement.

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Abstract

Purpose

The aim of this paper is to investigate the effect of management earnings forecasts on the level of information asymmetry around subsequent earnings announcement.

Design/methodology/approach

Employing the adverse selection cost method suggested by George et al., the paper compares for each sample firm the adverse selection cost around earnings announcement in forecasting years with that in non‐forecasting years.

Findings

Consistent with Diamond and Verrecchia is the finding that the earnings announcement in non‐forecasting years decreases information asymmetry during a three‐day announcement period and increases in a post‐announcement period up to seven days. No significant change in information asymmetry between pre‐ and post‐announcement periods when firms released a “good” news forecast is found. The firms that previously released a “bad” news forecast experience a significantly lower information asymmetry than those that did not forecast during announcement or post‐announcement days, and experience a decrease in information asymmetry in a five to seven‐day post‐announcement period.

Originality/value

This paper provides the first empirical reports on the different information asymmetry changes around earnings announcements followed by a “good” news management forecast from those followed by a “bad” news forecast.

Details

International Journal of Accounting & Information Management, vol. 16 no. 1
Type: Research Article
ISSN: 1834-7649

Keywords

Book part
Publication date: 26 May 2022

Setyo Tri Wahyudi, Kartika Sari, Rihana Sofie Nabella and Dyah Dwi Zubaidah

Banks are intermediary institutions that play an important role in accelerating economic growth. Therefore, banks need to implement policies to improve the efficiency and…

Abstract

Banks are intermediary institutions that play an important role in accelerating economic growth. Therefore, banks need to implement policies to improve the efficiency and quality of digital finance, namely through the Extensible Business Reporting Language (XBRL), which developed amid Society 5.0. However, the application of XBRL does not completely rule out the possibility of information asymmetry. Therefore, this study aims to analyze the effect of Extensible Business Reporting Language (XBRL) on asymmetric information with corporate disclosure as a moderating variable (expected to reduce information asymmetry) and analyze the effect of XBRL and control variables (size, turnover, stock price) on information asymmetry. The sample used is conventional banks that have been listed on the IDX and are not delisted, from 2015, since the implementation of XBRL until 2019 using the panel data regression method. The results obtained are that information asymmetry decreases with the application of XBRL, where corporate disclosure is a moderating variable. For the results of the control variable, the larger the size, the less information asymmetry and turnover. As for the stock price, the higher the stock price, the higher the information asymmetry.

Details

Modeling Economic Growth in Contemporary Indonesia
Type: Book
ISBN: 978-1-80262-431-1

Keywords

Book part
Publication date: 21 November 2016

Douglas Jozef Angus and Eddie Harmon-Jones

Extensive human and animal research has examined approach and withdrawal motivation, which we define as the simple urge to move toward or away, respectively. In this…

Abstract

Extensive human and animal research has examined approach and withdrawal motivation, which we define as the simple urge to move toward or away, respectively. In this chapter, we review seminal and recent research that showing that asymmetrical frontal cortical activity underlies approach and withdrawal motivation that occur during childhood, that characterize certain psychopathologies, and are present in everyday emotional experiences. Specifically, greater left-frontal activity is involved in approach motivation, including the expression and experience of anger, jealousy, desire, and joy. Conversely, greater right-frontal activity is involved in withdrawal motivation, including the expression and experience of some forms of sadness, crying, and depressed mood. We also review recent research suggesting that connectivity between the frontal and parietal cortices is a potential mechanism for the motivation-related effects of asymmetrical frontal activity.

Details

Recent Developments in Neuroscience Research on Human Motivation
Type: Book
ISBN: 978-1-78635-474-7

Keywords

Book part
Publication date: 24 October 2019

Tarek Ibrahim Eldomiaty, Panagiotis Andrikopoulos and Mina K. Bishara

Purpose: In reality, financial decisions are made under conditions of asymmetric information that results in either favorable or adverse selection. As far as financial…

Abstract

Purpose: In reality, financial decisions are made under conditions of asymmetric information that results in either favorable or adverse selection. As far as financial decisions affect growth of the firm, the latter must also be affected by either favorable or adverse selection. Therefore, the core objective of this chapter is to examine the determinants of each financial decision and the effects on growth of the firm under conditions of information asymmetry.

Design/Methodology/Approach: This chapter uses data for the non-financial firms listed in S&P 500. The data cover quarterly periods from 1989 to 2014. The statistical tests include linearity, fixed, and random effects and normality. The generalized method of moments estimation method is employed in order to examine the relative significance and contribution of each financial decision on growth of the firm, respectively. Standard and proposed proxies of information asymmetry are discussed.

Findings: The results conclude that there is a variation in the impact of financial variables on growth of the firm at high and low levels of information asymmetry especially regarding investment and financing decisions. A similar picture emerges in the cases of firm size and industry effects. In addition, corporate dividen d policy has a similar effect on firm growth across all asymmetric levels. These findings prove that information asymmetry plays a vital role in the relationship between corporate financial decisions and growth of the firm. Finally, the results contribute to the vast literature on the estimation of information asymmetry by demonstrating that the classical and standard proxies for information asymmetry are not consistent in terms of the ability to differentiate between favorable or adverse selection (which corresponds to low and high level of information asymmetry).

Originality/Value: This chapter contributes to the related literature in two ways. First, this chapter offers updated empirical evidence on the way that financing, investment, and dividends decisions are made under conditions of favorable and adverse selection. Other related studies deal with each decision separately. Second, the study offers new proxies for measuring information asymmetry in order to reach robust estimates of the effects of financial decisions on growth of the firm under conditions of agency problems.

Article
Publication date: 19 October 2021

Michael Grassmann, Stephan Fuhrmann and Thomas W. Guenther

Credibility concerns regarding integrated reports can harm the intended decrease of information asymmetry between a firm and its investors. Therefore, it is crucial to…

Abstract

Purpose

Credibility concerns regarding integrated reports can harm the intended decrease of information asymmetry between a firm and its investors. Therefore, it is crucial to examine whether voluntary third-party assurance enhances the credibility of integrated reports and, thus, decreases information asymmetry. Furthermore, this study aims to investigate the interaction effect between assurance quality and the disclosed connectivity of the capitals, a distinguishing feature of integrated reports.

Design/methodology/approach

Content analysis is performed of the 176 assurance statements included in the 269 integrated reports of Forbes Global 2000 firms disclosed from 2013 to 2015 and the 269 integrated reports themselves. Regression analyzes are applied to examine the associations between assurance, the disclosed connectivity of the capitals and information asymmetry.

Findings

The presence of an assurance statement in an integrated report significantly decreases information asymmetry. Surprisingly, assurance quality is not significantly associated with information asymmetry. However, an interaction analysis reveals that combining high assurance quality with high disclosed connectivity of the capitals allows a significant decrease in information asymmetry.

Research limitations/implications

The paper demonstrates that the connectivity of the capitals of integrated reports and assurance quality are connected and together are associated with information asymmetry.

Practical implications

The results imply, both for report preparers and standard setters, that assurance quality is advantageous only when combined with disclosed connectivity of the capitals.

Social implications

More information on non-financial information measured by the connectivity of the capitals of integrated reporting has an interaction effect together with assurance quality on information asymmetry.

Originality/value

This paper builds on a unique data set derived from the contents of integrated reports and accompanying assurance statements. Furthermore, it extends the integrated reporting literature by investigating the interaction between assurance quality and the disclosed connectivity of the capitals, which had not previously been examined in combination.

Details

Meditari Accountancy Research, vol. 30 no. 3
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 16 December 2021

Evelyne Vanpoucke, Martin Wetzels, Frank Rozemeijer and Marion Pilzak-Blonska

Buyers and suppliers often perceive relationship governance mechanisms, such as trust and contractual fairness, in different ways. These differences in perception create…

Abstract

Purpose

Buyers and suppliers often perceive relationship governance mechanisms, such as trust and contractual fairness, in different ways. These differences in perception create an extra layer of complexity that is often ignored in the extant literature. This study adds to the understanding of how perceived asymmetries in trust and contractual fairness, two key relationship governance mechanisms, impact relational rents. This study also analyzes how boundary spanners aid managers to deal with these perceived asymmetries.

Design/methodology/approach

Based on survey data of 103 buyer–supplier dyads from a single global manufacturer of industrial equipment, the authors test hypotheses of perceived asymmetries in trust and contractual fairness, as well as the moderating effect of boundary spanners, on relational rents.

Findings

This research challenges the belief that asymmetries negatively impact or lead to unstable buyer–supplier relationships. Furthermore, it explains how preferential treatment and length of the relationship could reduce the impact of asymmetric perceptions.

Practical implications

This study stresses that open communication, which considers different viewpoints, helps to overcome the negative differences in attitude and perception. In addition, the authors found that long-term relationships seem to be far more resilient in dealing with asymmetries and that preferential treatments are best applied in (approximately) symmetric relationships in terms of contractual fairness.

Originality/value

While studies on buyer–supplier relationships often assume symmetric perceptions of governance mechanisms, asymmetric perceptions are far more prominent in reality. This study aims to improve one’s understanding of the impact of these asymmetries as well as how boundary spanners can affect these perceptions.

Details

International Journal of Operations & Production Management, vol. 42 no. 1
Type: Research Article
ISSN: 0144-3577

Keywords

Article
Publication date: 29 November 2021

Amal Hamrouni, Mondher Bouattour, Nadia Ben Farhat Toumi and Rim Boussaada

The current study aims to investigate the relation between corporate social responsibility (CSR) and information asymmetry, as well as the moderating effect of board…

Abstract

Purpose

The current study aims to investigate the relation between corporate social responsibility (CSR) and information asymmetry, as well as the moderating effect of board characteristics (gender diversity, size and independence) on this relationship.

Design/methodology/approach

This paper uses a panel data regression analysis with the system generalized method of moments (SGMM) estimator of nonfinancial French firms included in the SBF 120 index. The environmental and social disclosure scores are collected from the Bloomberg database, while financial data are collected from the FactSet database.

Findings

The empirical results demonstrate that environmental disclosure has a positive impact on the level of information asymmetry, while social disclosure has no effect on the information environment. Gender diversity and board independence negatively impact the opacity index, while board size has a positive effect. The presence of women in board composition has a substitution effect on the relationship between environmental disclosure and information asymmetry. There is no moderating effect of board size on the association between CSR disclosure and information asymmetry. However, the proportion of independent female directors and board independence operates as substitutes to social disclosure on reducing information asymmetry.

Research limitations/implications

Although the models include the most common control variables used in the literature, they omit some variables. Second, the results should be interpreted with caution and should not be generalized to the entire stock market since the sample is based on large French companies.

Practical implications

The results of this study may be of interest to managers, investors and French market authorities since France is characterized by highly developed laws and reforms in the area of CSR. In addition, the paper leads to a better understanding of how women on the board, in particular, independent female directors, affect the relationship between CSR disclosure and information asymmetry. This could be of interest to French authorities, which has encouraged the appointment of women through the adoption of the Copé–Zimmermann law.

Originality/value

First, to the best of the authors' knowledge, this is the first study to explore the moderating effect of board characteristics on the relationship between CSR and information asymmetry. Second, unlike previous studies using individual proxies to measure information asymmetry, the authors favor the opacity index of Anderson et al. (2009). They calculate this index by including a fifth individual measure, namely, share price volatility. The opacity index better describes the information environment of companies than individual measures since it reflects the perceptions of investors and analysts together.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 23 October 2021

Imeda A. Tsindeliani and Irina E. Mikheeva

The purpose of this study is to identify the prospects and main directions for improving Russian legislation on the protection of the rights of consumers of financial…

Abstract

Purpose

The purpose of this study is to identify the prospects and main directions for improving Russian legislation on the protection of the rights of consumers of financial services taking into account the specifics of information asymmetry in banking.

Design/methodology/approach

Using the method of economic and legal analysis, the essence of information asymmetry in banking in the Russian Federation was considered. Taking into account international experience, the analysis of the legislation of the Russian Federation in the existing regulatory and legal field is carried out. A forecast of probable changes in the field of legal regulation of information asymmetry issues in banking was also carried out.

Findings

This paper deals with cases when information asymmetry can be recognized as unfair behavior. The main features of information asymmetry in banking on the part of credit institutions in terms of banks’ failure to provide information on the content of banking services on the right to refuse additional services have been studied.

Originality/value

This study suggests that the current Russian legislation does not provide the necessary protection for consumers of financial services from information asymmetry. Based on a comprehensive analysis of legislation and judicial practice, the information asymmetry in this paper is delimited as an economic and legal concept; the prerequisites and main forms of information asymmetry in banking are determined. The main provisions and conclusions of this study can be used in legislative activities when developing provisions on the protection of the rights of financial services consumers.

Details

Journal of Money Laundering Control, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 23 November 2021

Ehsan Poursoleyman, Samira Joudi, Gholamreza Mansourfar and Saeid Homayoun

Previous literature posits that corporate governance and information asymmetry are the main factors in making efficient investments. Meanwhile, a growing body of studies…

Abstract

Purpose

Previous literature posits that corporate governance and information asymmetry are the main factors in making efficient investments. Meanwhile, a growing body of studies is of the opinion that corporate governance can also mitigate the problem of information asymmetry and consequently exerts significant impacts on the association between information asymmetry and investment efficiency. This study aims to analyze the impact of corporate governance and information asymmetry on investment efficiency. It also tests the moderating role of corporate governance in the relationship between information asymmetry and investment efficiency.

Design/methodology/approach

The sample consists of 4,082 firms domiciled in 20 developed countries over the years from 2003 to 2019, including 33,812 firm-year observations. The bid–ask spread is used as a proxy for information asymmetry. To measure corporate governance performance, a proxy provided by ASSET4 is employed, and to determine the optimal levels of investments, we relied on the growth opportunity. To estimate the models, ordinary least squares and generalized method of moment are used.

Findings

The results reveal that information asymmetry is inversely related to investment efficiency, and, corporate governance mitigates this negative association.

Originality/value

This paper sheds light on the role of corporate governance in firms as a lever for mitigating information asymmetry and tries out information asymmetry and agency theories in relation to the impact of information asymmetry on investment efficiency. It also confirms the theory stating that corporate governance can be considered as a determinant of investment efficiency.

Details

Journal of Economic and Administrative Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1026-4116

Keywords

Article
Publication date: 7 December 2021

Shirley Wang

Past research on team conflict has often conceptualized it as a collective phenomenon whereby members of the same team perceive similar levels of conflict. However…

Abstract

Purpose

Past research on team conflict has often conceptualized it as a collective phenomenon whereby members of the same team perceive similar levels of conflict. However, similarity in perspectives can more often be the exception than the norm. As such, the purpose of this paper is to examine the effects of relationship conflict (RC) asymmetry on information elaboration and team performance. Additionally, I introduce a new construct: perception of team RC asymmetry and propose that it strengthens the positive effects of RC asymmetry.

Design/methodology/approach

A total of 181 MBA students comprising 52 teams participated in the research. Students worked together for the duration of the semester to complete a team project that comprised 45% of their final grade. Surveys were administered at three points in time with performance measured at the end and other focal variables measured at the midpoint. Regression analyses and the PROCESS macro were used to examine a first stage moderated mediation model.

Findings

Results showed that RC asymmetry increased elaboration, which, in turn, improved team performance. The link between RC asymmetry and elaboration was moderated by the perception of team RC asymmetry.

Originality/value

The present research shows that to have a fuller understanding of RC one must consider the level of dispersion experienced by team members. Taking this approach has uncovered a way in which RC can actually benefit teams instead of lead to destructive outcomes.

Details

International Journal of Conflict Management, vol. 33 no. 2
Type: Research Article
ISSN: 1044-4068

Keywords

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