Information Asymmetry Research Articles

Pengaruh Pengungkapan Modal Intelektual, Asimetri Informasi, dan Profitabilitas Terhadap Manajemen Laba Riil

The purpose of this study was to examine the effect of intellectual capital disclosure using Intellectus Model, information asymmetry, and profitability through the ratio of ROA (Return on Assets) on real earnings management in primary consumer goods companies that listed on the Indonesia Stock Exchange (IDX) in the 2015-2019 period. This research is a quantitative study which using secondary data that were obtained from the official website of the Indonesia Stock Exchange (IDX) in the form of annual financial report. The sample selection used is purposive sampling method in order to obtain 25 companies. The criteria used in this study were as follows: sample selection criteria and for companies that have been registered since 2014, not classified as primary consumer goods or agricultural food product industry, and have complete financial report data from 2015-2019. The analysis technique used is Multiple Linear Regression (MLR) through the Statistical Package for the Science 25 (SPSS 25) program with data tabulated using Microsoft Excel. The results of this study indicate that: intellectual capital disclosure using Intellectus Model has no effect on real earnings management, information asymmetry has a positive effect on real earnings management, while profitability through the ratio of ROA have no effect on real earnings management.

Understanding Digital Campaign Competence: Conceptualizing Data-Driven Political Advertising Literacy

ABSTRACT Technological advancements create new ways of informing and persuading citizens in the political advertising context. Insights are limited regarding how citizens deal with data-driven political advertising (DDPA). This is problematic because the collection and combination of large amounts of data render them vulnerable to information and power asymmetries. Using multidisciplinary perspectives, this article discusses the digital campaign competence of voters. We look at the interplay of literacy components, offer a typology, and predict campaign behavior, such as ad engagement and ad avoidance. We use data from a multiple-wave panel survey (N W1 = 1914, N W3 = 1303) conducted during the 2021 German federal elections. A latent profile analysis reveals five voter profiles with varying levels of DDPA literacy (i.e. conceptual understanding and evaluative perceptions). People mostly evaluate DDPA as neutral or negative, highly differ in their level of objective conceptual understanding, and underestimate the effectiveness of DDPA. We find no differences between the five profiles in their ad engagement but find differences concerning ad avoidance. The results deepen our understanding of a digitally campaign-competent electorate and highlight areas in which citizen empowerment is needed in light of the inequalities that DDPA has produced.

Corporate Sustainability and Corporate Value

In recent years, the concept of sustainable development has gradually lodged itself in the public mind, and there is increasing emphasis on companies’ performance in environmental, social, and corporate governance (ESG) aspects. This paper empirically investigates the impact of corporate ESG performance on firm value based on all A-share listed companies in China from the first quarter of 2015 to the fourth quarter of 2020 as the initial research sample. The research results indicate that the better the corporate ESG performance, the higher the firm value. The study provides clear insights: firstly, ESG performance can enhance firm value, revealing that ESG can reduce information asymmetry and reduce financial risks for enterprises. Secondly, ESG performance is an endogenous driving force for companies to promote environmental protection, social responsibility, and corporate governance construction, prompting companies to establish a sound ESG information disclosure system. Thirdly, it provides crucial evidence for ESG investors, compelling corporate managers to pay more attention to the impact of ESG management principles on the company and consider the company's future sustainable development.

Can Fintech Reduce the Cost of Corporate Debt Financing?

Amidst the wave of a new round of scientific and technological revolution, it has become an important strategic means for enterprises to accelerate the development of financial technology and promote the digital transformation of economic activities. This paper empirically examines the impact and mechanism of the listed companies' use of fintech on their own debt financing costs, and concludes that the development of fintech can significantly reduce the cost of corporate debt financing, and the lower the degree of information asymmetry between enterprises and financial institutions, the lower the concentration of supply chain, the more significant the effect of fintech on reducing the cost of corporate debt financing. This paper brings fintech and corporate debt financing cost into the same analytical framework, expands existing research, and puts forward corresponding suggestions and prospects.

Can digital transformation reduce corporate illegality?

AbstractThe advent of the digital economy has ushered in unprecedented opportunities for corporate development. Utilizing a comprehensive data set comprising Chinese listed companies spanning the period 2011–2020, this study empirically examines the impact of digital transformation on corporate illegality. The findings reveal a significant reduction in corporate illegality attributable to digital transformation. This empirical result retains its significance even when subjected to a battery of robustness tests. In terms of the underlying mechanisms, this paper conjecture that digital transformation reduces the internal and external information asymmetry, thereby curbing corporate illegality. Further heterogeneous analysis shows that digital transformation is more effective among corporates with higher agency cost (state‐owned or large corporates) or corporates located in regions with lower degree of marketization level. These heterogeneous effects provide supportive evidence to the above conjecture. The implications of this study extend the boundaries of digital transformation research and furnish novel and actionable insights into the prevention of corporate illegality.

The color of FinTech: FinTech and corporate green transformation in China

How to drive the transformation toward a green economy has become an urgent topic of concern around the world under the pressure of global warming. This study sheds light on the effect of FinTech on corporate green transformation. Based on machine learning and text analysis methods to construct the two key metrics, our findings show that FinTech promotes corporate green transformation, which is mainly achieved by alleviating information asymmetry, relaxing financial constraints and increasing risk-taking. The above conclusions remain unchanged after a series of robustness tests, such as instrumental variable and difference-in-difference methods, etc. Additionally, this positive effect is more pronounced in high-tech, non-state-owned and heavily-polluting companies, and it is amplified by the peer groups' green transformation strategies. Overall, our study reveals the green nature of FinTech and provides creative insights into the achievement of the goal of carbon emission peak and neutrality in China.

How does greenness translate into greenium? Evidence from China's green bonds

Although green bonds serve as one of the most promising tools for low-carbon transition, the existing studies fail to thoroughly examine the pricing effects of green attributes in the greenbond (GB) markets. Using data on green and conventional bonds in China's primary market from 2016 to 2022, this paper explores how greenness translates into a greenium in the GB markets. The empirical findings show that green labeling bonds have a greenium compared to conventional bonds. However, the greenium varies based on investor perception. Drawing on the theories on attribute centrality, our study differentiates the central and peripheral attributes of greenness, considering the greenness of both the issue and the issuer. We find that the issuers can benefit from the extent/credibility of the issue's greenness due to the mitigation of information asymmetry. Furthermore, the greenness of the issuer also contributes to the greenium because of investors' pro-environmental preferences. More interestingly, the issuer's greenness is the central attribute and dominates the investors' perceptions of greenness. Overall, our research facilitates an understanding of how investors form greenness perceptions of green bonds and contributes to the development of GB markets.

Navigating Inflation Dynamics: The Interplay Of Corporate Profits, Supply-Side Factors, And Policy Interventions

Employees with high innovation capacity in organizations develop new ideas by taking more responsibility and risk. Innovations that emerge thanks to these employees increase growth and efficiency. The presence of employees with high individual innovation is important in universities where scientific knowledge is produced intensively. The personal innovativeness of the employees is directly related to the management styles of the managers. In today's information and technology age, realizing this relationship with sound communication and information sharing may be possible. Because a human is a social being who speaks, establishes relationships, and manages communication. It can be said that mushroom management in educational institutions such as universities, where educating people is the basis, weakens this communication due to asymmetric information and reduces the tendency for innovation. This study aims to reveal the effect of the mushroom management approach on academicians' perceptions of individual innovativeness. The study population consists of academic staff working in state universities operating in Turkey. The data was obtained through questionnaires. The data were analyzed by structural equation model. According to the analysis results, the mushroom management approach increases the employees' resistance to innovation and decreases their openness to innovation.

Nested Markets and the Transition of the Agro-Marketing System towards Sustainability

We are currently witnessing a global transition (albeit slow) towards new, more sustainable models of development and consumption. This transition activates and highlights a series of discrepancies between the various actors in agri-food marketing systems, including the institutions that govern regulatory and trade aspects. These discrepancies highlight that the global agri-marketing system does not provide adequate responses to the principles of sustainability. This is due to a mixture of opportunism, information asymmetries, and ‘lock-in effects’, which create serious market failures. This, in turn, brings structural holes, in which new forms of exchange are born. We identify these as nested markets: hybrid market forms that often use new information technologies and create a new form of proximity in which reciprocity and reputation play a central role. In this article, we argue that the market is not only the place where prices and quantities are assessed. Markets are complex social spaces, where more-or-less stable relationships are formed, based on values of reciprocity and reputation that contain opportunism. This article discusses the many well-documented cases of new markets. This article argues that these new markets are characterized by a strong specificity of the resources used (that include territory, sustainability, and solidarity).

FACTORS INFLUENCING SMALL AND MEDIUM ENTERPRISES' DECISION TO APPLY FOR BANK LOANS: A QUANTITATIVE ANALYSIS IN VIETNAM

This study investigates the determinants influencing the decision of Small and Medium Enterprises (SMEs) to apply for bank loans. Drawing upon a theoretical framework encompassing human capital, firm attributes, business strategy, and information asymmetry, we develop a model to predict SMEs' propensity to seek bank financing. Employing a quantitative methodology in Vietnam, we utilize a hypothetical-deductive testing approach on primary data collected through questionnaires focusing on loan applications. Our findings reveal several significant factors influencing SMEs' inclination towards bank loans. Contrary to expectations, the business experience of a firm's owner exhibits no significant correlation with the likelihood of applying for a bank loan. However, variables such as the educational background of the firm's owner, firm size, collateral availability, and interest rates on loans exhibit negative associations with loan application propensity. Conversely, factors including the presence of comprehensive business plans and establishment of relationships with bankers during start-up phases demonstrate positive relationships with SMEs' inclination to apply for bank loans. This study contributes to the understanding of SMEs' financing decisions and provides valuable insights for financial institutions in designing tailored lending strategies to meet the diverse needs of SMEs.

Two-player nonlinear Stackelberg differential game via off-policy integral reinforcement learning

For the nonzero-sum games, players have taken different strategies to achieve the Nash equilibrium. However, regarding hierarchical optimization and asymmetric information, Nash equilibrium is ineffective. The Stackelberg game provides us with a leader–follower strategy to cope with this problem. This paper solved two-player continuous-time nonlinear Stackelberg differential games with unknown system dynamics using an off-policy integral reinforcement learning (IRL) technique. A two-level hierarchy optimal control problem is the Stackelberg differential game, and locating the open-loop Stackelberg equilibrium is equivalent to solving the coupled Hamiltonian-Jacobi (HJ) equations. First, the optimal strategies for the leader and the follower are derived. Then, the closed-loop system’s asymptotic stability of optimal control solution is proved. Based on the policy iteration (PI) algorithm, an off-policy IRL algorithm is developed to solve the Stackelberg game for completely unknown system dynamics. The control strategies and cost functions of the leader and follower are approximated using neural networks (NNs). It is demonstrated that NNs weight errors of off-policy algorithm are uniformly ultimately bounded (UUB). Lastly, two simulation examples demonstrate that the proposed learning algorithm is capable of obtaining two-player Stackelberg equilibrium strategies.

Financial inclusion through Islamic financial instruments: A catalyst for small and medium enterprises (SMEs)

The term Islamic finance is used to refer to financial activities conforming to Islamic Law (Sharia). One of the main principles of the Islamic finance system is the prohibition of the payment and the receipt of riba (interest) in a financial transaction. The term riba covers all forms of interest and is not limited to usury or excessive interest only. The most critical and significant implication of banning interest is the indirect prohibition of a “pure” debt security. The key point to bear in mind is that Islamic law does not recognize money and money instruments as a commodity but merely as a medium of exchange. Hence any return must be tied to an asset, or participation and risk-taking in a joint enterprise (such as partnerships). A pure debt security is replaced with an “asset-linked” security, direct financing of a real asset, and different forms of partnerships of which equity financing is the most desirable. In addition to prohibition of riba, there are several other important provisions which may affect financial transactions. These include the prohibition of ‘gharar’ (uncertainty or asymmetrical information), ‘maysir’ (gambling, speculation), hoarding, as well as trading in prohibited commodities (for example, pork and alcohol).

한우고기 할인판매행사가 한우 및 한돈가격 변동성과 수익률에 미친 영향

We analyzed the impact of ‘Hanwoo beef promotional sales events’, part of the Hanwoo Beef Checkoff Programs, on the volatility and rate of return for both Hanwoo and Handon wholsale prices. In order to account for information asymmetry and investigate the relationship between volatility and the rate of return, we employed the GJR-GARCH model combined with the GARCH in mean model. Our findings reveal that the implementation of ‘promotional sales events’ had a stabilizing effect on Hanwoo beef prices by lowering their volatility. It is also found that the rate of return increased. As price volatility increased, indicating an associated rise in the risk premium due to heightened market risk. Although the implementation of these events did not show statistical significance in influencing the rate of return for Handon pork, it was observed to have a marginal impact on price volatility.

Causes of conflicts in standardization alliances related to the Belt and Road Initiative

Effective conflict management is pivotal for achieving innovation performance within standardization alliances, particularly those for the Belt and Road Initiative (B&R Initiative). However, existing research has paid limited attention to the interdependent relationship between influencing factors of conflicts in these alliances. To address this gap, this paper employs the interpretative structure model (ISM) to establish mutual relationships among 16 identified influencing factors. The results show that target difference, unbalanced input of resources, and unreasonable distribution of benefits are recognized as key facilitators at the top level, while political risks, impact of financial factors, and policy changes are identified as foundational drivers at the bottom level. At the intermediate level, factors such as demand difference, technical capabilities difference, cognitive difference, value pursuit difference, information asymmetry, lack of trust, poor communication, resource dependency, and unreasonable contribution evaluation are positioned. These identified interdependence relationships offer crucial reference information for conflict management in standardization alliances for the B&R Initiative.

The Green Development in Saline–Alkali Lands: The Evolutionary Game Framework of Small Farmers, Family Farms, and Seed Industry Enterprises

Amid global climate change and population growth, the prevalence of saline–alkali lands significantly hampers sustainable agricultural development. This study employs theories of asymmetric information and bounded rationality to construct an evolutionary game model, analyzing the interactions among small farmers, family farms, and seed industry enterprises in the context of saline–alkali land management. It investigates the strategic choices and dynamics of these stakeholders under the influence of economic incentives and risk perceptions, with a focus on how government policies can foster green development. Utilizing Delay Differential Equations (DDEs) for simulations, this study highlights the risk of “market failure” without government intervention and underscores the need for government participation to stabilize and improve the efficiency of the green development process. The findings reveal that factors such as initial willingness to participate, the economic viability of salt-tolerant crops, seed pricing, research and development costs, and the design of incentive policies are crucial for sustainable land use. Accordingly, the paper proposes specific policy measures to enhance green development, including strengthening information dissemination and technical training, increasing the economic attractiveness of salt-tolerant crops, alleviating research and development pressures on seed companies, and optimizing economic incentives. This study provides a theoretical and policy framework for the sustainable management of saline–alkali lands, offering insights into the behavioral choices of agricultural stakeholders and supporting government strategies for agricultural and environmental protection.

Market intelligence gathering, asymmetric information, and the instability of money demand

AbstractThe observed money demand in the U.S. had a stable negative relation with the interest rate up until the 1990s. After this period, this relation fell apart and has never been restored. We show that the central bank's ability to gather information, referred to as market intelligence (MI), matters to generate an upward‐sloping money demand curve. We calibrate the model to the U.S. data for the period from 1990 to 2019 and show that MI helps to match the money demand. We also show that it is beneficial for the society, since it mitigates the inefficiency associated with asymmetric information.

Social connections and innovation in diversified conglomerates

AbstractWe study the effect of social connections between divisional managers and CEO on the scale and success of innovation activities in US diversified conglomerates. Divisional managers who previously worked or studied with the CEO file a greater number of patents during their tenure at the segment. These patents receive more citations in the future and represent a greater scientific and economic value. To provide causal support for our findings, we exploit plausibly exogenous variation in connections caused by CEO nonperformance‐related retirements. The difference‐in‐differences estimation shows that after the CEO leaves the office, connected segments experience a drop in the quantity and quality of innovation activities. The effect of connections to the CEO on innovation outcomes is stronger in firms with high internal information asymmetry. These findings can imply that social connections help to mitigate adverse selection problems associated with risky R&D investments.

A Digital Platform Strategy to Improve Food Waste Disposal Practices: Exploring the Case of "Too Good To Go"

This conceptual article delves into the intricate dynamics of global food security and the paradox of food waste, with a focus on Europe and Italy. Specifically, we examine the transformative potential of digital platforms, with a spotlight on the Too Good To Go platform, in tackling the challenge of redistributing food surpluses. In conventional market settings, the intricacies of food waste often go unnoticed by buyers and sellers, resulting in an inefficient equilibrium quantity determined solely by supply and demand forces. This failure to achieve an optimal outcome leads to a missed opportunity to maximize social benefit. Taking a microeconomic perspective, we highlight the platform's capacity to mitigate the adverse environmental and social impacts associated with food waste. Our findings illustrate how a market-based platform can address the inefficiencies and shortcomings of the Coase Theorem within the realm of food waste. By facilitating negotiation, reducing information asymmetries, and addressing environmental costs, the platform exemplifies how innovative market solutions can foster efficiency and sustainability.

Harmonizing European Financial Regulation: Is There a Need for Improved Similarity in Prospectus Liability Rules?

This paper on financial regulation addresses the extent to which rules on liability for information should be standardized across the EU/EEA region. The method applied is an analysis of legal documents. My finding is that further harmonization may lead to difficulties concerning procedural rules. Some authors suggest harmonizing the civil procedure for prospectus liability cases. This could reduce asymmetric information and thus contribute to efficient markets. However, mandatory disclosure comes with costs. These may increase if standards inconsistent with domestic procedures are imposed. The topic may be of interest for regulating other aspects of life, such as environmental information disclosure.

Derivative Financial Instruments (Derivatives) in Hedging Practices of Non-Financial Organizations

The financial and economic situation in Russia in 2022 has sharply reduced the market for derivative financial instruments (derivatives), including the instruments applied by non-financial organizations (hedgers) to reduce commercial risks (hedging). At the same time, volatility in commodity markets and unilateral restrictive measures increase the risks of unforeseen property losses in connection with the execution of derivatives, which is why Russian non-financial organizations are increasingly trying to invalidate such contracts. However, a commonly used ground for contesting in many cases (violation of the requirements of a law or other legal act (Article 168 of the Civil Code of the Russian Federation)) turns out to be irrelevant, indicating a distorted understanding of the legal nature of derivative financial instruments and contradictory behavior of plaintiffshedgers. Their typical arguments are explained through the legal features of derivatives: the aleatory nature on which the distribution of monetary obligations of the parties and the uncertainty of the amount of monetary provision are based, and the lack of legal prerequisites for the universal presumption of asymmetry of the parties of the hedging derivative. The legal significance of volatility in the contractual structure of a derivative financial instrument is justified by the strict relationship between its regulatory aleatory nature and the random variability of the parameters of the underlying asset, the econometric characteristics of which do not affect the validity and effect of the contract. The author draws conclusions that unlimited property losses on a derivative are preconditioned not only by its aleatory nature, but also by the hedging objectives. It is noted that unconditional application of the concept of strengths and weaknesses in derivative financial instruments involving non-financial organizations is controversial due to various aspects of contractual and information asymmetry.