Is information asymmetry always detrimental to firm value? findings from the restaurant industry

Abstract

The purpose of the current study was to investigate the impact of information asymmetry on firm value in the restaurant industry. Secondary financial data were collected for U.S.-based publicly traded restaurant firms. In addition, fixed-effects panel regression analyses were performed to examine the proposed relationship. The results of the current study showed that in the restaurant industry, not only high information asymmetry but also an overly transparent information environment can be detrimental to firm value, as evidenced by an inverted U-shaped relationship between asymmetric information and firm value in the restaurant industry. This result differs from the findings of previous studies, which mostly support the negative impact of asymmetric information on firm value. Furthermore, the current study showed that firm age and financial leverage serve as moderators of the curvilinear relationship between the asymmetric information environment and firm value in the restaurant industry.