Information Asymmetry Research Articles

How Digital Platforms Promote Roles of Nonprofit Human Service Organizations During the COVID-19 in China

ABSTRACT The COVID-19 pandemic compelled nonprofit human service organizations (NPHS) to rapidly adapt to heightened service demands while prioritizing the well-being of their staff and volunteers. Although digital platforms hold promise in facilitating NPHS adaptation, little is known about their impact during the crisis. How and through what pathways do digital platforms help NPHS adapt their service roles in times of crisis? Did digital platforms with different types of sponsorship vary in the way they affect NPHS’s roles? Our study, based on 94 interviews in China, reveals that digital platforms assisted NPHS through three pathways: reducing transaction costs in stakeholder engagement, mitigating information asymmetry in targeting service recipients, and promoting shared responsibility for volunteer participation. Different sponsorship types influenced these pathways: government-sponsored platforms enhanced legitimacy, business-sponsored platforms leveraged private resources, and nonprofit-sponsored platforms bolstered citizen trust. This research informs scholars and practitioners on understanding how NPHS remained agile and innovative while facing extraordinary external challenges.

Crowdfunding Success Factors: Financial Information and Advertising Finance

This study aimed to determine whether financial information, business location, funding objectives and advertising content as intervening variables can help the success of funding through 10 crowdfunding platforms registered with OJK. This study used signalling theory in discussing equity crowdfunding platforms, which can be assumed by small investors as a signal of business quality and can convince investors to invest, thus reducing the problem of information asymmetry. The research method used in this study was descriptive quantitative with the analytical model used to test the hypothesis was the logistic regression analysis model. The population of this study consisted of companies seeking funding through crowdfunding platforms registered with OJK Indonesia. The research was conducted in 2023. The data used in this study was secondary data obtained from published crowdfunding platform data. A purposive sampling technique was used to determine the research sample. The results of this study are expected to provide information to funding project owners and investors to be used as a guide in making decisions. Keywords: financial information, business location, funding purpose, advertising finance, and funding success

EXPRESS: Flowers and Bees: Spatial Network Effects in the Adoption of a Sharing-Economy Platform

This paper empirically analyzes the spatiotemporal diffusion of a car-sharing platform that connects consumers with individual car owners. We develop a model of adoption by both consumers and providers that accommodates network effects across locations, as consumers travel to pick up cars, and information asymmetry, as only the providers’ locations are shown on a map. We apply it to data at the earliest stage of the platform and find that proximity and consumer mobility play a significant role in the spatial network effects of existing providers on consumers across locations. Consequently, the impact of additional supply at a destination on consumer adoptions at an origin varies by origin-destination pair and is asymmetric, as certain destinations draw more visitors than others and given differences in local characteristics. In contrast, existing consumers have a limited impact on provider adoptions. Through seeding experiments, we investigate how the geographic distribution of initial participants impacts the platform diffusion and find that targeting the supply side in big cities leads to the highest platform growth. We also use our parameter estimates to measure the long-term impact of a local promotional campaign and show that it is mostly local despite spatial network effects.

The Impact of Real Estate Investment Trusts (REITs) on the Indian Commercial Real Estate Market: A Study of Investor Perception and Market Performance

The introduction of Real Estate Investment Trusts (REITs) in India has marked a significant evolution in the country's commercial real estate landscape. This paper examines the multifaceted impact of REITs on the Indian commercial real estate market, focusing on key dimensions such as liquidity, transparency, investor access, and market development. Firstly, REITs have enhanced liquidity in the commercial real estate sector by providing investors with a liquid avenue to invest in income-generating properties, thereby reducing the traditionally illiquid nature of real estate investments. This increased liquidity has facilitated capital flow into the market and stimulated transaction activity. Secondly, REITs have contributed to greater transparency in the Indian real estate market. By mandating regular disclosures and adherence to stringent governance standards, REITs have improved information symmetry between investors and property developers, leading to a more efficient allocation of capital and reduced investment risk. Thirdly, the introduction of REITs has widened investor access to commercial real estate assets. Individual investors, institutional funds, and foreign investors now have the opportunity to participate in the market through REIT investments, thereby diversifying their portfolios and potentially earning stable returns from rental income and capital appreciation. Furthermore, REITs have played a pivotal role in the development of the Indian commercial real estate market. Their presence has spurred the professionalization of property management practices, encouraged the adoption of international standards, and catalyzed the growth of ancillary industries such as real estate services and financial advisory firms.

The value effect of sustainability: evidence from Latin American ESG bond market

ABSTRACT We use the event study methodology to examine the effect of 115 environmental, social, and governance (ESG) bond issuances on the stock price of Latin American listed firms over the period 2016–2022. Consistent with the signaling theory, firms sending a signal of commitment to sustainability obtain a positive and significant average Cumulative Abnormal Return (CAR) of 1.97% during an event window of 18 days. The CAR is higher for first-time issuers, reaching 2.28%. Firms with smaller and more diverse boards are associated with higher CARs. However, ownership concentration reduces the CARs due to the potential misbehavior and expropriation risk from controlling shareholders. These results suggest that firm-level corporate governance mechanisms are critical to the ESG bonds signaling effect. Overall, our findings indicate that investors in Latin American capital markets positively value the reduction of information asymmetries regarding firms’ sustainability efforts, especially in a firm that mitigates potential agency conflicts.

SketchTrans: Disentangled Prototype Learning With Transformer for Sketch-Photo Recognition.

Matching hand-drawn sketches with photos (a.k.a sketch-photo recognition or re-identification) faces the information asymmetry challenge due to the abstract nature of the sketch modality. Existing works tend to learn shared embedding spaces with CNN models by discarding the appearance cues for photo images or introducing GAN for sketch-photo synthesis. The former unavoidably loses discriminability, while the latter contains ineffaceable generation noise. In this paper, we start the first attempt to design an information-aligned sketch transformer (SketchTrans +) via cross-modal disentangled prototype learning, while the transformer has shown great promise for discriminative visual modelling. Specifically, we design an asymmetric disentanglement scheme with a dynamic updatable auxiliary sketch (A-sketch) to align the modality representations without sacrificing information. The asymmetric disentanglement decomposes the photo representations into sketch-relevant and sketch-irrelevant cues, transferring sketch-irrelevant knowledge into the sketch modality to compensate for the missing information. Moreover, considering the feature discrepancy between the two modalities, we present a modality-aware prototype contrastive learning method that mines representative modality-sharing information using the modality-aware prototypes rather than the original feature representations. Extensive experiments on category- and instance-level sketch-based datasets validate the superiority of our proposed method under various metrics.

Bridging Information Gaps: Public Sector Intervention in Tourism Promotion during Crises – A Game Theory Approach

Abstract The present study applies Game Theory to study public investment at tourist destinations to determine the ‘best action’ for tourist destinations in competitive scenarios. This study proves that the higher the probability that the public sector of the destination will invest in tourism promotion, the greater the expected financial benefits for the destination. Furthermore, the research results show that the higher the probability of tourists traveling to the destination, the greater the expected financial return for the Destination’s Public Sector (DPS) investing. Notably, the findings prove the positive impact of reducing information asymmetry between tourists and destinations. Results from applying Game Theory to the tourist industry show that spending on advertising may be motivated by more than just increasing visitor numbers. Finally, this article’s main contribution is offering a theoretical-mathematical framework applicable to any tourist destination.

Disentangling Reputation from Selection Effects in Markets with Informational Asymmetries - A Field Experiment

Disentangling Reputation from Selection Effects in Markets with Informational Asymmetries - A Field Experiment

Impact of Internet of Things (IoT) on Enhancing Transparency and Efficiency in Bangladesh's Agri-food Supply Chain

Background: The agri-food supply chain in Bangladesh is crucial for the nation's sustenance and economic stability but faces challenges like lack of transparency, inefficiencies, and information asymmetry. The integration of Internet of Things (IoT) technologies offers transformative potential, enhancing the Transparent Physical and Information Flow (PHF) and thereby influencing the Transparency in the Agri-food Supply Chain (TASC).   Objective: This study aims to investigate the impact of IoT integration on PHF and its subsequent effect on TASC in Bangladesh, framed around two core hypotheses: the significant influence of IoT on PHF and the consequent impact of an IoT-enhanced PHF on TASC.   Methods: Employing a comprehensive methodological framework, the study utilized IBM SPSS for exploratory factor analysis and IBM AMOS for confirmatory factor analysis (CFA) and structural equation modeling (SEM) to assess the relationships between IoT technologies, PHF, and TASC. The analysis was based on data collected from 400 respondents in Bangladesh's agriculture sector.   Results and Conclusion: The findings validate both hypotheses, demonstrating a significant and positive impact of IoT technologies on PHF and, subsequently, on TASC. The results highlight the crucial role of IoT in enhancing supply chain transparency and operational efficiency.   Implications of the Research: This research provides empirical evidence on the effectiveness of IoT technologies in addressing transparency issues within the agri-food supply chain. It underscores the potential of IoT to foster improved decision-making, efficiency, and consumer trust in the agricultural sector, particularly in developing contexts like Bangladesh.   Originality/Value: This study contributes original insights into the role of IoT technologies in enhancing the agri-food supply chain's transparency and efficiency. By focusing on the context of Bangladesh, it offers valuable implications for policymakers, industry practitioners, and researchers, emphasizing the transformative potential of IoT in agricultural supply chain management.

Strategic disclosure of carrier’s carbon emission reduction information by competitive shippers in marine supply chains

The growing consumers’ environmental consciousness has driven competitive shippers (cargo owners) to voluntarily disclose carbon emission reduction (CER) information about their carriers (transportation service providers), aiming to establish a low-carbon image and enhance their competitiveness. Unfortunately, due to the low transparency in marine supply chains, profit-driven shippers are inclined to selectively disclose CER information. To address this, the independent audit by Environmental Non-Governmental Organizations (ENGOs) can be an effective mechanism. An analytical model is proposed to examine competitive shippers’ equilibrium information disclosure strategies, considering the asymmetry of CER information and the ENGOs’ adult. Our findings reveal the potential for an asymmetric equilibrium, where only one shipper chooses to disclose information while the other does not. We also identify two types of Prisoner’s dilemma situations when the acquiring information cost is moderate, and which dilemma can arise depending on the probability of an ENGO audit. Specifically, an increase in the probability of ENGO audits may backfire, leading shippers to reduce their CER investments and exacerbate the Prisoner’s dilemma. Our findings offer practical implications for shippers and policymakers in promoting environmental sustainability across the industry, particularly in the face of intense competition and the lack of accessible CER information.

Blockchain-Based Peer-to-Peer Decentralised Lending and Borrowing System

Abstract: A decentralized peer-to-peer lending and borrowing system represents a transformative paradigm shift in the traditional financial landscape. This abstract explores the concept, benefits, and challenges of such a system, which leverages blockchain technology and smart contracts to facilitate direct, trustless interactions between lenders and borrowers. In this innovative system, intermediaries like banks are circumvented, enabling individuals to participate directly in lending and borrowing activities. Blockchain's decentralized ledger ensures transparency, security, and immutability of transaction records, while smart contracts automate the execution of loan agreements, thereby reducing the risk of default and eliminating the need for intermediaries. Key advantages of this decentralized system include increased financial inclusivity, reduced interest rates, and a broader pool of lenders and borrowers. It fosters a more efficient allocation of capital by matching lenders and borrowers based on predetermined criteria, thereby reducing information asymmetry.

Directors with supply chain experience as heterogeneous network pipes: how does it affect M&A efficiency

PurposeThe link between interlocking directors and mergers and acquisitions (M&A) efficiency has been analyzed in an information asymmetry environment. Despite an abundance of evidence highlighting that interlocking directors do contribute to M&A efficiency in an acquirer-target binary relationship, the target is embedded in a complex network of supplier-customer relationships, which implies that the acquirer needs to consider the value of suppliers, distributors and retailers in the target’s supply chain in improving M&A efficiency. Through the lenses of acquirer-target multivariate relationships, this paper aims to examine how directors with supply chain experience (DSCs) act as heterogeneous network pipes to affect M&A efficiency.Design/methodology/approachUsing a sample of 311 A-share listed firms on the Shanghai and Shenzhen stock exchanges in China during 2011–2020, this paper investigates the relationship between DSCs and M&A efficiency by using ordinary least squares (OLS) regression.FindingsThrough empirical research, we verify a negative relationship between DSCs and M&A duration and an inverted U-shaped relationship between both DSCs and M&A performance, revealing the complexity of the relationship between experience and efficiency. Furthermore, drawing on upper echelon theory, the information value of DSCs will be greatly reduced when executives have overconfident psychological characteristics, which are mainly shown to negatively moderate the relationship between DSCs and M&A performance. We also conduct multiple robustness tests and supplemental analyses to illustrate the robustness and boundaries of our findings. Finally, DSCs are likely more important in environments among growth and mature firms as well as high-growth industries.Originality/valueWe break through the assumption that interlocking directors contribute to M&A efficiency in an acquirer-target binary relationship and examine the impact of DSCs on M&A efficiency based on micro-empirical evidence from the value of target-related upstream or downstream industries, which extends the connotation of interlocking directors and enriches the study related to factors influencing M&A efficiency.

Diffusion model of multi-agent collaborative behavior in public crisis governance network based on complex network evolutionary game

In order to explore the phenomenon of diffusion of group decision making formed by the emergence of decision-making behaviors of governance agents in public crisis governance systems, this research uses a complex network evolutionary game approach, considers BA scale-free networks as network vectors of public crisis governance systems, and develops a diffusion model of collaborative governance decision making behaviors. Simulation experiments are also conducted to show the macro-level impact of micro-subjects' decision-making behavior on group “Emergence-Diffusion”. The results of this study show that the cost of collaborative governance has the most significant effect on the depth and breadth of the spread of collaborative behavior in governance networks. The size of the network determines the speed of network diffusion. The smaller the network size, the more sensitive it is to the spillover benefits of collaborative governance, and the larger the network size, the more sensitive it is to the penalties of non-compliance. The findings of the study have implications for the collaborative behavior of multiple agents in public crisis governance. The main findings are that (1) in order to ensure the stability of the collaborative governance system, decision making options should be selected according to the size of the network. (2) A reasonable penalty mechanism for breach of contract should be set up to avoid the phenomenon of "free-riding" in collaborative governance. (3) Reasonable allocation of collaboration benefits and maintenance of cooperative relationships between nodes in the neighborhood. (4) External regulators should ensure that information in the network is disseminated without barriers and reduce the phenomenon of information asymmetry.

Roads to nowhere but the belt is Gucci: has China’s Belt and Road Initiative been successful so far and why?

This article assesses the success of China’s Belt and Road Initiative (BRI) with respect to three objectives: strengthening China’s geopolitical stance, spurring geo-economic development in the Western regions and instilling a spatial fix to overaccumulation and thirdly, providing profit opportunities to troubled state-owned enterprises. I find that the BRI has only delivered on the third aspect, with even the BRI’s signature white elephant projects providing windfall incomes to the state-owned enterprises (SOEs) constructing and operating them. My explanation of this phenomenon is two-fold. Firstly, I argue that tense, coercive competition (Crotty, 1993) has spurred Chinese SOEs to revert to rent-seeking activity in order to stay afloat and realise managers’ cadre ambitions. As the state-owned Asset Supervision and Administrative Council (SASAC) evaluates manager performance based largely on company performance, demanding numbers that cannot be achieved under coercive competition in an environment of overcapacity, managers reverted to guanxi practices and corruption to secure under-the-counter deals, relying on soft budgets and beneficial lending practices. Amid tightening domestic regulation and Xi’s anti-corruption campaign, these strategies are becoming less viable and sustainable to pursue at home. As managers’ incentive structure has not evolved, pressure to seek rents persists, pushing SOEs to pursue their strategies abroad via the BRI. Secondly, the export of the strategies to persist amid coercive competition is enabled by a fragmented institutional environment, allowing SOEs to abuse asymmetries in information and outmanoeuvre stringent evaluation of their proposed BRI projects by mobilising political support through networks.

Mandatory ESG disclosure, information asymmetry, and litigation risk: Evidence from initial public offerings

AbstractI use the staggered adoption of mandatory environmental, social, and governance (ESG) disclosure regulations around the world to explore the impact of ESG disclosure on initial public offering (IPO) underpricing. I find robust evidence that underpricing is substantially lower in countries with ESG disclosure mandates. High‐quality disclosure environments moderate and tougher liability standards amplify the negative association between ESG disclosure mandates and underpricing, which suggests that ESG disclosure mandates reduce information asymmetry and litigation risk. The impact of ESG disclosure mandates on underpricing is stronger in countries with more pronounced environmental, social, and governance concerns.

Social Capital and Cross-Border Venture Capital Investments in China

In the context of the Chinese market, foreign cross-border venture capitalists have devised specific strategies to mitigate the challenges associated with the liabilities of foreignness, such as risks and information asymmetry. They have strategically leveraged social capital to not only decrease investment risk but also to influence their investment preferences and behaviors. To investigate the influence of different types of social capital on the investment decisions of cross-border venture capitalists, hypotheses are proposed and tested using regression analysis. Our research reveals several key findings in this regard. Firstly, cross-border venture capitalists with a robust structural social capital network exhibit a greater propensity to invest in early-stage companies. This suggests that well-established connections and partnerships within the Chinese entrepreneurial ecosystem provide a level of comfort and confidence when investing in ventures at their infancy. Interestingly, relational and cognitive social capital, though undoubtedly valuable, do not significantly impact the decision to make early-stage investments. Furthermore, we have observed that venture capitalists with higher levels of structural and cognitive social capital are more inclined to form syndications. Collaborative partnerships and shared knowledge networks seem to be crucial factors that drive syndication decisions. Lastly, venture capitalists endowed with substantial structural and relational social capital tend to allocate larger investment amounts, signifying the influence of business or personal relationships and network connections on the scale of their investments.

Implementation of China's Zero-Mark up Drug Policy and Impact on Healthcare Markets

This study investigates the impact of China's "Zero-mark up" drug policy on healthcare costs, employing a research methodology that includes the screening and analysis of close and return data from hospitals, pharmaceutical companies, and health insurance companies' stocks at five significant time points. The findings provide insights into the potential effects of the policy and offer recommendations for its improvement. The study contributes to cost control measures in China's medical insurance system, addressing the specialization and information asymmetry in the medical industry. The Zero-mark up drug policy aims to reduce healthcare costs, sever financial interests between medical institutions and professionals, and enhance management capabilities. By examining the implementation effects and proposing new approaches, this research provides practical implications for effective cost control in healthcare.

Disclosure frequency of parent company financial reporting: Insights from analyst forecasting accuracy

AbstractPrior research predominantly concentrates on the comprehensive financial disclosures of consolidated statements, often overlooking the distinct informational value inherent in the financial statements from parent companies. The debate continues on whether the frequency of disclosures from parent companies should align with that of their consolidated counterparts. The periodic dissemination of a parent company's financials can significantly reduce information asymmetry, thus enabling analysts to promptly and accurately grasp the firm's financial health. Yet, this increased frequency may come at the cost of information reliability, leading to more errors and promoting myopic decision‐making among executives, which might lead to misguided analysis. Drawing on shifts in China's financial disclosure mandates – from obligatory to optional quarterly reporting by parent firms – we observe that analysts tend to generate more precise earnings forecasts for those publicly traded entities that refrain from quarterly disclosures of parent company reports. This enhancement in forecast precision is particularly marked in instances where corporate information quality is substandard or when analyst coverage is extensive. Supplementary findings suggest that this effect intensifies for annual reports audited by firms outside the Big 4 and when there is more coverage by other media. Consequently, our findings imply that easing the stringent quarterly reporting by parent companies and adopting a voluntary disclosure system does not diminish the informational richness available to investors.

Exploring Consumer Hoarding Patterns: A Case Study Social Networks on Consumer Hoarding Behaviour of Toilet Paper

This article investigated the impact of social networks on consumer hoarding behavior during the COVID-19 pandemic, focusing specifically on the global toilet paper hoarding phenomenon. Motivated by the pandemic's widespread fear and uncertainty, the study filled a research gap by stressing the relevance of network science in understanding hoarding situations. The study, which examined a case study of the toilet paper scarcity that began in Hong Kong and extended globally, identified three major issues: the unique characteristics of online networks, the herding mentality promoted by social factors, and the asymmetry in information availability. To overcome these difficulties, the study suggests strategic options. It was suggested that artificial intelligence be used for content regulation and information validation in order to proactively counteract the unique features of internet networks. Targeted psychological interventions, notably stress reduction programs, were recommended to counteract the herding mindset that drives hoarding. To mitigate the impact of asymmetric information, media literacy initiatives aimed at improving consumers' critical thinking skills were suggested. Finally, this study gave important insights into the complex dynamics of social networks and consumer hoarding behavior during crises. It emphasized the importance of a comprehensive understanding of online networks' roles, laying the groundwork for future research in network science, consumer behavior, and crisis management.

Enterprise digital transformation and ESG performance

This article empirically tests the impact of enterprise digital transformation on ESG performance and its channel mechanism. Based on the data of Chinese listed enterprises from 2009 to 2019, this article uses crawler technology to capture the key words of “digital transformation” in the annual reports of enterprises and the collection of policies supporting enterprises’ digitalization in China to describe the intensity of enterprises’ digital transformation. We find that enterprise digital transformation significantly improves ESG performance. The intermediary mechanism shows that the improvement of enterprises’ digital transformation can improve enterprises’ ESG performance from three aspects: first, it can strengthen the effect of external supervision by improving information symmetry; second, it can promote the improvement of enterprises’ innovation output and innovation efficiency; third, it can optimize enterprises’ internal governance and reduce agency costs. Industry heterogeneity analysis shows that in industries with high degree of digital peers and monopoly, the improvement effect of enterprise digital transformation on ESG performance is more obvious. Based on the above findings, we put forward corresponding policy recommendations.