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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

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. 25 no. 4
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 29 April 2021

Mohsen Rashidi

The purpose of this study is to investigate the information asymmetry pricing (relation between information asymmetry and expected return) based on environmental…

Abstract

Purpose

The purpose of this study is to investigate the information asymmetry pricing (relation between information asymmetry and expected return) based on environmental uncertainty and accounting conservatism.

Design/methodology/approach

The current study applies panel regression method estimator to investigate the relationship between accounting conservatism, environmental uncertainty and information asymmetry pricing of 1,309 firm-year observations in Iran for the period 2008–2018.

Findings

The result indicated the negative relation between accounting conservation and information asymmetry pricing and documented a positive association between environmental uncertainty and information asymmetry pricing.

Practical implications

In the present study, the weaknesses caused by the ambiguity of capital market efficiency in market performance-based statistical models are compensated and partially covered by quantifying the relationships and implementing models in each quintile. Results obtained from this study will aid policymakers to evaluate disclosure rules and firms to manage their information. The study is based on the corporate accounting and financial literature and examines behavioral changes in information and its effect on information asymmetry pricing that can be applied to investors, managers, standardization committees and legislators.

Originality/value

The risk of accounting information in the context of the capital market environment can be divided into two parts: a part that is ambiguous about the accuracy of this information and another part that is a distribution of information. Unlike other research, information asymmetry pricing has also been addressed with regard to the origin and distribution of information. This study also considers the effect of information asymmetry and market constraints by considering the ability of financial reports to transmit firm information.

Details

International Journal of Productivity and Performance Management, vol. 71 no. 8
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 29 May 2007

Fujun Lai, Jian Wang, Chang‐Tseh Hsieh and Jeng‐Chung (Victor) Chen

This paper seeks to investigate and provide empirical evidence of the interrelationships among network externalities, e‐business adoption and information asymmetry.

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Abstract

Purpose

This paper seeks to investigate and provide empirical evidence of the interrelationships among network externalities, e‐business adoption and information asymmetry.

Design/methodology/approach

A conceptual model was proposed and tested using 307 completed interview cases selected from a database of 2,075 Chinese international trading companies published by the Beijing Municipal Bureau of Commerce for this study.

Findings

The results indicated that network externalities significantly influenced e‐business adoption and information asymmetry, and e‐business adoption influenced information asymmetry through information sharing and collection. A split sample analysis showed that cultural contexts significantly moderated the interrelationships among network externalities, e‐business adoption, and information asymmetry.

Research limitations/implications

Data for this study were collected only from mainland China, therefore, non‐Chinese companies (foreign‐owned) operating in China may have been influenced by Chinese cultures and some of them have been localizing their operations in China. The influences of network externalities on business performance and decision making remain unclear. In addition, data were collected from self‐reported questionnaires, and thus may be subject to self‐reporting bias. Future studies should use more objective measurements to reduce the potential for self‐reporting bias.

Practical implications

This study contributes significantly to the literature by providing empirical evidence on interrelationships among network externalities, e‐business adoption, and information asymmetry. The findings in this study also provide valuable insights for managers to better understand the influence of network externalities on e‐business adoption.

Originality/value

This study contributes significantly to the literature by providing empirical evidence of the interrelationships among network externalities, e‐business adoption, and information asymmetry. The findings also provide managers with valuable insight into better understanding of the nature of these interrelationships.

Details

Industrial Management & Data Systems, vol. 107 no. 5
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 7 September 2015

Mark Russell

This paper aims to examine whether firms with high information asymmetry disclose more information under a continuous disclosure regime, and, second, the paper examines…

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Abstract

Purpose

This paper aims to examine whether firms with high information asymmetry disclose more information under a continuous disclosure regime, and, second, the paper examines whether continuous disclosures reduce information asymmetry.

Design/methodology/approach

The study models relations between continuous disclosures and information asymmetry using ordinary least squares regression and two-stage least squares regression.

Findings

The study finds firms with high information asymmetry disclose more information. Further, the study finds that disclosure in the presence of high information asymmetry increases asymmetry. Finally, while bad news increases information asymmetry, the disclosure of firm-specific good and bad news is associated with reduced information asymmetry.

Originality/value

The paper identifies conditions under which Continuous Disclosure Regime increases information in markets and influences information asymmetry.

Details

Accounting Research Journal, vol. 28 no. 2
Type: Research Article
ISSN: 1030-9616

Keywords

Open Access
Article
Publication date: 20 November 2020

Sangeetha K. Prathap and Sreelaksmi C.C.

Consumers often face a dilemma regarding the purchase decisions of traditional handloom apparel because of the non-availability of information cues that would enable them…

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Abstract

Purpose

Consumers often face a dilemma regarding the purchase decisions of traditional handloom apparel because of the non-availability of information cues that would enable them to assess the quality of the product. The spread of counterfeit products in the market adds to information asymmetry. The study aims to examine factors influencing purchase intention of traditional handloom apparel that have Geographical Indication (GI) certification, which follows the certification procedure specified by the World Intellectual Property Organisation (WIPO).

Design/methodology/approach

A survey was conducted among 202 traditional handloom apparel consumers in India and the data was analysed using structural equation modelling. The purchase intention of GI certified handloom apparels was examined as the dependent variable, whereas quality consciousness, product diagnosticity, perceived information asymmetry were placed as independent variables. The mediating role of perceived quality and product trust in the relation between perceived information asymmetry and purchase intention was also looked into.

Findings

Results reveal that quality consciousness positively influences product diagnosticity (facilitated by the GI label certification) which in turn reduces perceived information asymmetry. Further, a reduction in perceived information asymmetry was found to increase the purchase intention of traditional handloom apparel, fully mediated by the perceived quality and product trust.

Research limitations/implications

The customers who are facing a dearth of information while making purchase of traditional handlooms will be benefitted from the GI certification label which provides authenticity regarding product attributes confirming quality. Further, the study adds to the theory by establishing the relation between quality consciousness and perceived information asymmetry.

Practical implications

The findings imply that GI handloom apparel sellers should design marketing strategies that would project GI certification labels for traditional handloom apparel to effectively communicate product quality attributes, thus enhance product diagnosticity reducing information asymmetry. While organic certification for agricultural products is done at the individual producer’s level, GI certification is done under the producer’s collective label. Further, studies may be extended to agricultural products (Darjeeling tea, Alphonso mangoes, etc.), food items (rasgulla, Thirupathi laddoo, etc.) and handicrafts (Aranmula Mirror, Payyannur pavithra ring) that have acquired GI label in India. GI certification is adopted worldwide and studies may be extended to such products also [example Parma ham (Italy), Hessian wine (Germany)].

Originality/value

Empirical research on determinants of consumer purchase intentions of GI certified traditional handloom apparel is a novel attempt done in the context of a developing country such as India. The study brings out the importance of the GI certification label envisaged by the WIPO, which can serve as a tool for reducing uncertainties faced by consumer in framing purchasing intentions. This can be extended to any product type such as agricultural, food products and handicrafts that has acquired GI certifications in different countries. The study revealed that product diagnosticity (through GI certification) could reduce perceived information asymmetry that leads the consumer to the perception of quality and product trust which results in the purchase intention of traditional handloom apparel. The outcomes of the study can be instrumental in designing marketing strategies for capturing market share.

Details

Journal of Humanities and Applied Social Sciences, vol. 4 no. 1
Type: Research Article
ISSN:

Keywords

Article
Publication date: 4 January 2018

Mohammed Iqbal and Shijin Santhakumar

This study aims to measure the magnitude of information asymmetry between insiders and outsiders in Indian equity market. The study also investigates the effect of major…

Abstract

Purpose

This study aims to measure the magnitude of information asymmetry between insiders and outsiders in Indian equity market. The study also investigates the effect of major information sources that affect information asymmetry namely, the informativeness of financial statements, news reports about the company and analyst follow-up.

Design/methodology/approach

Six-month profitability of insider trade was used as the proxy to measure information asymmetry. Fama-MacBeth two-stage regression was used to analyse the effect of information sources upon information asymmetry.

Findings

The results of the analysis demonstrate that in comparison with findings of similar studies the level of information asymmetry is comparatively high in India. On an average, profitable insider traders in India earn 19.28 per cent return than outside investors. Purchase transactions are more profitable than sales transactions, while the size of company and information asymmetry is associated inversely. Further, news and analyst follow-up are inversely associated with information asymmetry whereas informativeness of financial statements has little effect on information asymmetry.

Practical implications

The study have important insights for corporates in insider information management and legal compliance of insiders’ market activities. Results pointing to the requirements of a deeper Regulatory monitoring and stringent legal framework.

Social implications

The result validates the concerns of investor protection against informed trade.

Originality/value

The measurement of information asymmetry using profitability of insider trade is novel in Indian context even though the methodology is often used in the literature.

Details

Journal of Indian Business Research, vol. 10 no. 1
Type: Research Article
ISSN: 1755-4195

Keywords

Article
Publication date: 17 June 2019

Gustavo Magalhães de Oliveira, Christiano França da Cunha, Silvia Morales De Queiroz Caleman and Roberta Luiza Gomes Maia

The purpose of this paper is to investigate information asymmetry in cattle supply transaction in Brazil. While the literature traditionally explores the seller’s…

Abstract

Purpose

The purpose of this paper is to investigate information asymmetry in cattle supply transaction in Brazil. While the literature traditionally explores the seller’s information asymmetry advantages, the authors, in turn, draw attention to buyer’s role. This paper aims to show what farmer characteristics present negative correlation with slaughterhouses’ information asymmetry advantages. By slaughterhouses’ advantages, the authors refer to slaughterhouses’ opportunistic appropriation of value due to hidden information, such as quality measurement and remuneration of difficult-to-measure attributes. In doing so, this paper addresses the following research question: what are the farmer’s characteristics with negative correlation with slaughterhouses’ information asymmetry advantages?

Design/methodology/approach

This paper employs a logit model regression on a survey of 89 Brazilian cattle breeders. Drawing on transaction cost economics, this study empirically evaluates farmers’ technology level, level of education, family tradition, farm size and efforts to collect price information, to test which of these characteristics present negative correlation with slaughterhouses’ information asymmetry advantages.

Findings

The results illustrate that the cattle breeders’ level of education is negatively correlated with buyers’ information asymmetry advantages. Additionally, the authors find a controversial result presenting efforts to collect price information as positively correlated with this kind of information asymmetry advantages. Farmer’s farm size, family tradition and the level of technology were not influential. These findings suggest that a possible value appropriation from buyers’ information asymmetry is a problem for several types of producers, even varying size, family tradition in the activity or transaction costs to collect price information (e.g. lack of transparency). Initiatives should try to reduce this problem to these farmers to avoid value appropriation resulting from information asymmetry problems, especially in the lack of transparency.

Originality/value

This paper adopts a survey about information asymmetry in cattle supply transactions in Brazil, which is well known as one of the most relevant producer and consumer of meat. The main contribution is to shed light on the understanding of buyers’ information asymmetry advantages in farmer-slaughterhouse transactions to avoid potential conflicts. Given some singularities of the Brazilian cattle industry, the authors can empirically test buyers’, not sellers’, information asymmetry advantages.

Details

British Food Journal, vol. 121 no. 8
Type: Research Article
ISSN: 0007-070X

Keywords

Article
Publication date: 15 August 2016

Beatriz Cuadrado-Ballesteros, Isabel-Maria Garcia-Sanchez and Jennifer Martinez Ferrero

The purpose of this paper is to analyze empirically the fundamental role that information asymmetry plays in the functioning of an efficient capital market as mediator in…

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Abstract

Purpose

The purpose of this paper is to analyze empirically the fundamental role that information asymmetry plays in the functioning of an efficient capital market as mediator in the relation between corporate disclosures and cost of capital.

Design/methodology/approach

By using a sample of 1,260 international non-financial listed companies in the period 2007-2014.

Findings

The findings suggest that high-quality financial and social disclosures quality reduce the cost of capital, by decreasing information asymmetry. In other words, the authors find evidence of the mediator role of information asymmetry in the relation between corporate disclosures and the cost of capital. These results are also controlled for differences on accounting standards and other institutional factors.

Originality/value

The central assumption is that the demand for corporate disclosures that reduces the information advantages of some investors (who are more informed) arises from agency conflicts and these information differences in turn, determine the cost of capital. This paper is the first attempt to study, jointly, the effects of decreasing information asymmetries by corporate disclosures on the cost of capital in an international setting. In addition, the authors focussed on both financial and social disclosures, creating empirical proxies whose validity for the analysis has been evidenced.

Details

Management Decision, vol. 54 no. 7
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 4 February 2014

Subasinghage Maduka Nuwangi, Darshana Sedera, Shirish C. Srivastava and Glen Murphy

Contemporary offshore information system development (ISD) outsourcing is becoming even more complex. Outsourcing partner has begun “re-outsourcing” components of their

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Abstract

Purpose

Contemporary offshore information system development (ISD) outsourcing is becoming even more complex. Outsourcing partner has begun “re-outsourcing” components of their projects to other outsourcing companies to minimize cost and gain efficiencies. This paper aims to explore intra-organizational information asymmetry of re-outsourced offshore ISD outsourcing projects.

Design/methodology/approach

An online survey was conducted to get an overall view of information asymmetry between principal and agents (as per the agency theory).

Findings

Statistical analysis showed that there are significant differences between the principal and agent on clarity of requirements, common domain knowledge and communication effectiveness constructs, implying an unbalanced relationship between the parties. Moreover, the authors' results showed that these three are significant measurement constructs of information asymmetry.

Research limitations/implications

In this study the authors have only considered three main factors as common domain knowledge, clarity of requirements and communication effectiveness as three measurement constructs of information asymmetry. Therefore, researches are encouraged to test the proposed constructs further to increase its precision.

Practical implications

The authors' analysis indicates significant differences in all three measurement constructs, implying the difficulties to ensure that the agent is performing according to the requirements of the principal. Using the agency theory as theoretical view, this study sheds light on the best contract governing methods which minimize information asymmetry between the multiple partners within ISD outsourcing organizations.

Originality/value

Currently, to the best of the authors' knowledge, no study has undertaken research on intra-organizational information asymmetry in re-outsourced offshore ISD outsourcing projects.

Details

VINE: The journal of information and knowledge management systems, vol. 44 no. 1
Type: Research Article
ISSN: 0305-5728

Keywords

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