Effect Of Information Asymmetry Research Articles

The cost bearing mechanism for advertising in a capital-constrained supply chain

With rising market competition, increasing numbers of firms are launching adverting to attract customers and promote product sales. The increase in operating costs caused by advertising places greater pressure on small retail businesses that are prone to capital shortages, leading them to seek financing from upstream firms. However, in the financing process, upstream and downstream firms may not be able to acquire all of one another's real information, which inevitably has a significant impact on their operating strategies. In this paper, by constructing a Stackelberg game, we study the effects of information asymmetry on the retailer's initial capital and the manufacturer's financing rate on their advertising strategies. We find that in a capital-constrained supply chain with symmetric information, when the advertising cost coefficient is low, manufacturer advertising is the superior strategy and increases the profits of the retailer and the manufacturer, consumer surplus and social welfare; when it is moderate, retailer advertising is the superior policy; but when it is high, retailer advertising is more beneficial for the manufacturer's profit, consumer surplus and social welfare but is more unfavorable for the retailer's profit. In addition, information asymmetry on the manufacturer's financing rate affects the advertising strategies of the manufacturer and the retailer, but information asymmetry on the retailer's initial capital fails. Additionally, we further extend the model to the Nash game scenario and cooperative advertising scenario and draw some different conclusions. The findings provide new theoretical implications for the formulation of firm advertising strategies.

The Impact of Accounting Information Quality on Corporate Investor Relations Research

This paper aims to explore the impact of accounting information quality on corporate investor relations and proposes corresponding enhancement strategies. The paper begins with an overview of accounting information quality and analyzes its importance to investors. It then delves into the impact of accounting information quality on investors, such as the effects of information asymmetry and information transparency on investor decision-making and trust. Furthermore, strategies for improving accounting information quality are proposed, providing reference for enterprises to optimize their accounting information quality.

Financial technology and firm productivity: Evidence from Chinese listed enterprises

Recent data show that the number of fintech investment deals is increasing, implying that fintech is gradually penetrating various industries and may have far-reaching impacts on industrial production and operations. This paper studies the impact of fintech on firm productivity and the mediating effects of financing constraints, information asymmetry and technological innovation. This paper collects data from 1662 samples of Chinese listed firms from 2011 to 2022 and screens the number of firms that meet the fintech criteria to construct the regional fintech development level. Our analysis shows that fintech has a positive effect on enhancing firm productivity. Path analysis reveals that digital transformation indirectly enhances firm productivity by reducing information asymmetry, easing financing constraints, and improving technological innovation. Our research introduces innovative approaches for developing indicators in financial technology. The insights generated from this study hold potential value for both entrepreneurs and governmental bodies.

Emission abatement in low-carbon supply chains with government subsidy and information asymmetry

Governmental subsidy policy and channel information structure have substantial effects on supply chain emission reduction, operations and marketing decisions. In this paper, we use game theory to study the interplay of government subsidizing arrangement and information asymmetry on manufacturers' emission reduction and retailers' low-carbon promotion. Suppose realistically that the investment coefficients for manufacturers' emission reduction levels and retailer' low-carbon promotion levels are their respective private information. Among diverse governmental subsidy schemes, we find dual subsidizing are the best choice for the defined level of total subsidy under information asymmetry, while it is not always the best choice if the total subsidy level is uncertain. Under information asymmetry, the results show that manufacturer have no incentive to lie under any subsidy policy. However, the retailer has incentive to misrepresent individual information and its misreporting behaviour is related to the coefficient and allocation ratio of governmental subsidies. On this basis, we illustrate that a screening model can be deployed to reduce the negative effects of information asymmetry on supply chain operations. We therefore propose the method of improving the performance of low-carbon supply chains under various situations of information asymmetry and governmental subsidizing schemes to achieve system-wide Pareto improvement.

الأثر المعدل للتحفظ المحاسبي على العلاقة بين عدم تماثل المعلومات وتكلفة رأس المال: دراسة تطبيقية على الشركات الصناعية المدرجة في بورصات دول مجلس التعاون الخليجي

The aim of this study is to identify the moderating effect of accounting conservatism on the relationship between information asymmetry and cost of capital. Since this issue is almost neglected in the emerging markets, especially in the Arab countries, the study uses data belongs to the industrial companies listed on the exchanges of the Gulf Cooperation Council (GCC) countries covering the 2015-2021 period. The results show that accounting conservatism moderates the positive effect of information asymmetry on the cost of capital. Therefore, companies may reduce cost of capital by decreasing information asymmetry and enhancing the use of conservative accounting practices. In particular, the level of disclosure and the efficiency of governance should be enhanced. Regulators can significantly contribute in this regard by issuing relevant regulations and improving the oversight over companies. Finally the study provides insights to be considered in the future research.

Updated Theory and New Evidence on the Effect of Information System Precision on Managerial Reporting

ABSTRACT Information asymmetry is fundamental to participative budgeting. Hannan, Rankin, and Towry (2006, “HRT”) develop a nuanced theory regarding the effect of information asymmetry on slack. The authors provide evidence that suggests increasing the precision of a superior’s information system, thereby reducing information asymmetry, can increase slack. We develop a refined version of HRT’s theory by incorporating evidence of how nonpecuniary incentives affect subordinates’ reporting slack from research subsequent to HRT. Our updated theory predicts that slack decreases as information system precision increases, opposite to the results in HRT. To test our refined theory, we replicate HRT’s experiment and find results consistent with our theory. Our results support HRT’s general theory but highlight the importance of establishing regularities of how nonpecuniary incentives affect behavior in accounting. Specifically, our updated theory and new evidence suggest that improving information system precision decreases budgetary slack, contrary to the results suggested in HRT. Data Availability: Data are available from the authors upon request. JEL Classifications: D82; M41; M52.

ON THE EFFECTS OF INFORMATION ASYMMETRY IN DIGITAL CURRENCY TRADING

We report on two studies that examine how social sentiment influences information asymmetry in digital currency markets. We also assess whether cryptocurrency can be an investment vehicle, as opposed to only an instrument for asset speculation. Using a dataset on transactions froman exchange in South Korea and sentiment from Korean social media in 2018, we conducted a study of different trading behavior under two cryptocurrency trading market microstructures: a bid-ask spread dealer’s market and a continuous trading buy-sell, immediate trade execution market. Our results highlight the impacts of positive and negative trader social sentiment valences on the effects of information asymmetry on observed trading patterns. This includes the spillover effect of volatile social sentiment, and the leverage effect when a cryptocurrency’s value falls or rises in response to changing sentiment. Our results highlight how volatility arises in parallel with investors’ reactions to public information and trade transaction volume. If the price falls beyond participants’ expectations, a negative shock from new information may lead to more volatile social sentiment than a positive shock of the same size does. Our work supports the roles of investment and speculation for cryptocurrency by identifying an immediate impulse and a longer-term effect of economic variables in the presence of sentiment-led information asymmetry.We contribute new knowledge to the interdisciplinary literature on the financial economics of digital currency for a technological innovation that has matured earlier than many observers may realize.

Evaluating information asymmetry effects on hotel pricing: a comparative analysis before and during the COVID-19 pandemic in the Taiwan’s market

The outbreak of the COVID-19 pandemic has imposed substantial impacts on the global hotel industry. This study employed a two-tier stochastic frontier model to investigate the dynamics of transaction information distribution within the tourist hotel lodging prices in Taiwan from July 2019 to November 2020. The primary objective was to analyze the disparities in price information between consumers and hoteliers before and after the outbreak of COVID-19. Empirical findings reveal a notable reduction in the divergence of lodging price information between consumers and hoteliers post the COVID-19 outbreak, particularly in metropolitan areas. The shift in consumer group structures within hotel operations induced by the pandemic has, in turn, exerted an influence on the pricing strategies adopted by hoteliers. The empirical results underscore that the outbreak of COVID-19 has contributed to a more transparent and comprehensive market price information environment, consequently diminishing the asymmetry in information between hoteliers and consumers.

The Effects of Information Asymmetry on Audit Fees

Audit fees refer to the financial compensation received by accounting firms and auditors in return for the delivery of their professional services. These services encompass a range of operations, including the analysis of financial statements, evaluation of internal controls, and performance of numerous other tasks linked to auditing. Typically, organizations remunerate external audit firms for their services through fees, which can be either annual or based on the specific services rendered. The remuneration for audit services is commonly subject to variability, with adjustments made based on the particular audit engagement's scope and complexity. This paper delves into the correlation between information asymmetry and audit fees. The concept of information asymmetry arises when there is an unequal distribution of information between two parties involved in a transaction, leading to an imbalance in knowledge. This phenomenon has a notable influence on the determination of audit fees. This paper examines the theoretical underpinnings, empirical findings, and practical ramifications of the impact of information asymmetry on audit costs and the quality of audit services. The work analyzes the elements that contribute to information asymmetry by conducting a comprehensive review of current literature and empirical studies. Through this analysis, the study sheds light on the complex dynamics between information asymmetry, audit fees, and audit quality.

Board Interlock Networks and Corporate Low-Carbon Innovation in China: Does Position Matter?

Through combining the resource dependence theory and social network theory, this study sheds light on how two major kinds of interlocking network positions—central network position and structural holes position—drive corporate low-carbon innovation. We consider the mediating effect of information asymmetry and knowledge absorptive capacity to reap benefits from occupying the two advantageous network positions. We have empirically investigated a sample of 3365 listed firms over the period of 2009–2018 drawn from China, the largest emerging market economy as well as the biggest carbon dioxide emitter. Our main results show that either holding a central network position or spanning a structural holes position plays a significant role in stimulating low-carbon technologies, and the promotion effect can be partially channeled through downward information asymmetry and upward knowledge absorptive capacity. Our findings differ from earlier work because of our emphasis on network position, and our specific focus on corporate low-carbon innovation and China's unique setting, rather than network size, greenhouse gas emissions, and developed economies. This study also provides significant implications for executives striving to improve firms’ low-carbon innovation performance, and for policymakers seeking ways to fulfill the mission of carbon dioxide abatement.

Relationship between housing, oil, gold and stock markets: evidence from UK and Norway

Purpose The purpose of this study is to explore the intricate relationship between oil prices, house prices in the UK and Norway, and the mediating role of gold and stock prices in both the short- and long-term, unraveling these complex linkages by employing an empirical approach. Design/methodology/approach This study benefits from a comprehensive set of econometric tools, including a multiequation vector autoregressive (VAR) system, Granger causality test, impulse response function, variance decomposition and a single-equation autoregressive distributed lag (ARDL) system. This rigorous approach enables to identify both short- and long-run dynamics to unravel the intricate linkages between Brent oil prices, housing prices, gold prices and stock prices in the UK and Norway over the period from 2005:Q1 to 2022:Q2. Findings The findings indicate that rising oil prices negatively impact house prices, whereas the positive influence of stock market performance on housing is more pronounced. A two-way causal relationship exists between stock market indices and house prices, whereas a one-way causal relationship exists from crude oil prices to house prices in both countries. The VAR model reveals that past housing prices, stock market indices in each country and Brent oil prices are the primary determinants of current housing prices. The single-equation ARDL results for housing prices demonstrate the existence of a long-run cointegrating relationship between real estate and stock prices. The variance decomposition analysis indicates that oil prices have a more pronounced impact on housing prices compared with stock prices. The findings reveal that shocks in stock markets have a greater influence on housing market prices than those in oil or gold prices. Consequently, house prices exhibit a stronger reaction to general financial market indicators than to commodity prices. Research limitations/implications This study may have several limitations. First, the model does not include all relevant macroeconomic variables, such as interest rates, unemployment rates and gross domestic product growth. This omission may affect the accuracy of the model’s predictions and lead to inefficiencies in the real estate market. Second, this study does not consider alternative explanations for market inefficiencies, such as behavioral finance factors, information asymmetry or market microstructure effects. Third, the models have limitations in revealing how predictors react to positive and negative shocks. Therefore, the results of this study should be interpreted with caution. Practical implications These findings hold significant implications for formulating dynamic policies aimed at stabilizing the housing markets of these two oil-producing nations. The practical implications of this study extend to academics, investors and policymakers, particularly in light of the volatility characterizing both housing and commodity markets. The findings reveal that shocks in stock markets have a more profound impact on housing market prices compared with those in oil or gold prices. Consequently, house prices exhibit a stronger reaction to general financial market indicators than to commodity prices. Social implications These findings could also serve as valuable insights for future research endeavors aimed at constructing models that link real estate market dynamics to macroeconomic indicators. Originality/value Using a variety of econometric approaches, this paper presents an innovative empirical analysis of the intricate relationship between euro property prices, stock prices, gold prices and oil prices in the UK and Norway from 2005:Q1 to 2022:Q2. Expanding upon the existing literature on housing market price determinants, this study delves into the role of gold and oil prices, considering their impact on industrial production and overall economic growth. This paper provides valuable policy insights for effectively managing the impact of oil price shocks on the housing market.

The Role of The Board of Commissioners in Moderating the Effect of Information Asymmetry on Earnings Management

The purpose of this study is to empirically examine the role of the board of commissioners in moderating the relationship of information asymmetry to earnings management. This study uses secondary data and measurement in this study consists of the size of the board of commissioners measured by the number of proportions of the board of commissioners, earnings management is measured using the modified Jones model, and information asymmetry is measured using the bid ask spread. The sample in this study are manufacturing companies listed on the IDX in 2019-2021. Testing the data in this study using Moderate Regression Analysis (MRA) and SPSS 23.0 as a testing tool. The results in this study are that the board of commissioners is not able to moderate the relationship of information asymmetry to earnings management, this is because this is due to several factors and this study shows that the size of the board of commissioners is still below 30 percent which indicates that the duties and responsibilities carried out by the board of commissioners in supervising and controlling management actions.

Principal-agent Relationship and Agency Problem

Progressively stricter requirements of labor division have led to the blossom of the principal-agent model, where differences in objective functions between the principal and the agent, as well as information asymmetry, often hinder the principal from maximizing their utility and can result in potential harm to both parties and social welfare. This paper aims to analyze the endogenous causes and issues resulting from the principal-agent model and proposes solutions. Additionally, the shareholder-CEO relationship in finance is applied as a specific case of the principal-agent model for further analysis. Through the construct of a simple model and a signaling mechanism pondering more realistic elements, the negative effect of information asymmetry can be weakened. Lastly, based on the findings of this paper and existing empirical research, the article proposes specific schemes for the above-mentioned mechanism and discusses their implementation and implications. The investigation of principal-agent issues and the proposal of appropriate countermeasures are of great significance and are always frontier concerns for both academia and society.

PENGARUH SELF EFFICACY, PARTISIPASI ANGGARAN, PENEKANAN ANGGARAN, ASIMETRI INFORMASI TERHADAP BUDGETARY SLACK

Individual participation in the company's budgeting process can trigger the emergence of dysfunctional behavior in the form of the individual's tendency to commit budgetary slack.. The purpose of this research is to analyze the effect of self-efficacy, budgetary participation, budgetary emphasis, and information asymmetry on budgetary slack. This research adopts a quantitative approach, utilizing a survey methodology with a structured questionnaire. The analysis method includes descriptive statistics and assessments of data quality and multiple linear regression analysis. The study population and sample consist of 34 employees with structural positions involved in the budget preparation process at the Probolinggo Regency Disaster Management Agency. The findings reveal a negative correlation between self-efficacy and budgetary slack. Moreover, budget participation exhibits a positive influence on budgetary slack, along with budget emphasis. Additionally, information asymmetry is found to have a positive impact on the occurrence of budgetary slack. Keywords: Efficacy, Participation, Emphasis, Asymetric, Slack

The Origin of Asymmetric Information: Revisiting the Rationale for Regulation

Abstract Akerlof’s seminal model on asymmetric information forms the basis for a broad range of regulatory interventions aimed at addressing the adverse effects of unequal information between transacting parties. While a groundbreaking model of the effects of information asymmetries in markets, Akerlof’s model does not examine why information asymmetries emerge. This article argues that an examination of the underlying drivers and origins of information asymmetries revitalises the policy rationale for regulatory intervention.

The Influence of Budget Participation, Information Asymmetry, and Budget Emphasis on Budgetary Slack in Aceh Government

This study aims to examine the effect of budgetary participation, information asymmetry, and budget emphasis on budgetary slack in the SKPA Aceh Government. The population of this research is all State Civil Servants (ASN) in SKPA Aceh Government. The research sample used was 129 people selected by purposive sampling method, consisting of Heads of SKPA, Secretaries, and Heads of Planning and Reporting Subdivision in 43 SKPA. This research is a quantitative research, the data used is in the form of primary data obtained from distributing questionnaires to research respondents. The data analysis technique uses multiple linear regression analysis with the help of the IBM SPSS 26 program. The regression results for the partial test show that budget participation, information asymmetry, and budget emphasis have a positive and significant effect on budgetary slack in the Aceh Government SKPA.

The influence of information asymmetry on the interaction between voluntary corporate disclosure and cost of equity: evidence from publicly traded Indian enterprises

PurposeThe purpose of this paper is to investigate whether information asymmetry mediates the relationship between disclosure and cost of equity.Design/methodology/approachThe study is based on a sample of 500 companies listed in Bombay Stock Exchange for a period of six years from 2015 to 2021. Panel data regression is applied to analyze the relationship between voluntary disclosure, cost of equity and information asymmetry. Mediation effect of information asymmetry is tested with the help of Barron and Kenny’s (1986) approach.FindingsFindings suggest that in case of Indian companies, disclosure reduces cost of equity directly and indirectly through mediation of information asymmetry. Indian investors value credible information for better estimation of future returns, supporting the validity of estimation risk and stock market liquidity hypothesis, which proposes an inverse relationship between disclosure and cost of equity.Research limitations/implicationsManagers can use the findings to strategize their disclosure policy and secure funds at lower cost. Shareholders can monitor managerial actions by demanding credible disclosures. Government too can encourage voluntary disclosure by providing special incentives to the firms.Originality/valueThis study is a pioneering research that investigates the mediating influence of information asymmetry between disclosure and cost of equity with reference to the Indian corporate landscape.

FACTORS AFFECTING EARNINGS MANAGEMENT IN MANUFACTURING COMPANIES LISTED ON INDONESIAN STOCK EXCHANGE

This research aims to determine the effect of leverage, firm size, profitability, liquidity, information asymmetry, and earnings power on earnings management in manufacturing companies listed on the Indonesia Stock Exchange (IDX) throughout 2018-2020. In this research 171 observational data are used in which obtained from 57 manufacturing companies that have met established criteria, where the samples are selected using purposive sampling technique. The data were calculated and processed using Microsoft Excel 2016 dan EViews 12. This research tested the classical assumption before testing the hypothesis and used the multiple linear regression model method, which the suitable model for this research is Fixed Effect Model (FEM). Leverage, profitability, and earnings power have significant effects on earnings management, while firm size, liquidity, and information asymmetry have insignificant effects on earnings management.

The choice of external financing source: The role of company size and stock liquidity

This paper aims to answer whether firms of different sizes and stock liquidities differ in the choice of external sources of financing in companies listed in CEE countries. To this end the net debt issuance is regressed on the financial deficit. In regressions Pecking Order Coefficients are allowed to vary across firms with different sizes and stock liquidities. The results indicate that companies with less liquid shares prefer issuing debt to cover financial deficits more than companies with more liquid shares. This implies that stock liquidity may substitute debt issuance in alleviating the adverse effects of information asymmetry, especially in relatively small companies. This is the first study in which the relationship between liquidity and debt-equity choice is considered solely from a pecking order theory point of view. Also this is the first study in which stock liquidity effects on capital structure are studied in the CEE countries. Research results may point to the advantages of increasing the liquidity of shares which may contribute to reducing information asymmetry and thus a better allocation of resources.

Pengaruh Transparansi, Asimetri Informasi, dan Partisipasi Masyarakat terhadap Potensi Kecurangan Dana Desa

This research aims to examine the effects of transparency, information asymmetry, and community participation on the potential for fraud in village funds. The research includes the category of causality. The population of this research is 12 Nagari in Sutera sub-district, Pesisir Selatan regency. This study type is total sampling and the sample of this research makes all the population as samples. For the data source used is in the form of primary data. Data collected through questionnaires. The results obtained from this study are (1) Transparency has no effect on the potential for fraud in village funds. (2) Information asymmetry has a positive and significant effect on the potential for fraud in village funds. (3) Community participation does not effect the potential for fraud in village funds.