Do online social networks affect information asymmetry?

Abstract

This paper empirically explores the impact of online social networks on information asymmetry, based on an international survey conducted in January - August 2021, with 930 respondents. The methodology follows cross-sectional multivariate regressions augmented by a Structural Equation Modeling (SEM) approach. The findings show that young people living in their origin country are more prone to check the veracity of information read, especially those who are Non-Governmental Organization (NGO) activists. Europeans are very sensitive regarding the veracity of posted information. The number of spoken languages facilitating both processes. Additionally, the information asymmetry is attenuated when the users spend more hours on online social networks or use more platforms. The core result is very interesting, showing that the posted information without serious filters during the reading stage is a serious source of asymmetry. Not least, the owner and government restrictions nonlinearly affect information asymmetry by inverted U-shape. This reinforces the idea that none of those characteristics can be absolutized to improve information asymmetry.