Phenomenon Of Information Asymmetry Research Articles

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.

The Application of Game Theory in Engineering Project Management

The coexistence of conflict of interest and cooperation are two of the most significant characteristics in the process of construction project management. To maximize their interests, all parties involve and restrict each other in the process of management, resulting in the phenomenon of information asymmetry between Party A and Party B, passive slacking of contractors, project quality defects, and project claims in the process of project management. By applying game theory to the construction of engineering projects, it can facilitate managers from all parties to choose better decisions, thereby further improving the level of engineering management and expanding their own profits. Starting from the basic concepts of game theory and engineering project management, this article focuses on three perspectives: project bidding stage, construction stage, and engineering claim stage. It analyzes the game between owners and contractors under incomplete information conditions and concludes that both parties should realize the sharing of information resources and strictly abide by the principle of engineering contract equality. Several suggestions related to engineering project management are also proposed.

ФУНКЦІОНУВАННЯ БІЗНЕСУ В УМОВАХ ІНФОРМАЦІЙНОЇ АСИМЕТРІЇ

The process of digitalization has covered all sectors of economic activity in Ukraine and the world. The economic impact of information and communication technologies on economic sectors or spheres of life (at the macro level), and specific products or services (at the micro level) is determined by added value. Digital tools and technologies make it possible to increase the level of production of innovative products, shorten the period from the development of an idea to the sale of finished products, ensure an appropriate level of profitability from the introduction of advanced technologies and create competitive advantages for the state. At the same time, digitalization is not only a tool for realizing national economic interests that can create new opportunities for economic development, but also a source of new risks and threats, including the phenomenon of information asymmetry. The research examines the phenomenon of information asymmetry and its impact on business functioning. It is proved that in the context of digitalization, information is the dominant factor of production. The essential and substantive characterization of information as a production factor is provided. It is proved that information is a direct productive force, the most important factor of production along with the traditional ones – land, labor, and capital. The relationship between the spread of digitalization processes and the emergence of information inequality, or “asymmetric information”, is substantiated. The main factors that led to the deepening of information asymmetry under martial law in Ukraine are outlined. These include the physical destruction of information infrastructure facilities, massive cyber attacks and the spread of disinformation, and rapid and unpredictable changes in the national economy. The author models the impact of information asymmetry on business functioning, which is reflected in pessimistic business expectations, which is directly related to the uncertainty of the business environment. Based on the results of official research, it is confirmed that information asymmetry is the main obstacle to the successful adaptation of economic entities to conditions of uncertainty, and its reduction is the main direction of public policy.

The entrepreneurship of accounting work and its role in reducing information asymmetry: Evidence from insurance companies

The primary aim of this research is to provide a comprehensive understanding of the role played by entrepreneurial accounting practices in mitigating information disparities, as perceived by employees within the realm of Jordanian financial intermediaries. This role is encapsulated in various components, including accounting systems and policies, international financial reporting standards, international external auditing standards, international internal auditing standards, as well as professional and ethical conduct guidelines. In pursuit of our research objectives, we adopted two distinct methodological approaches. Firstly, a descriptive analytical approach was employed, involving the development of a structured questionnaire to gather primary data pertaining to the assessment of independent variables associated with entrepreneurial accounting practices. The second approach encompassed an applied perspective, seeking to gauge the impact of entrepreneurial accounting practices on reducing information asymmetry. This was achieved by examining the financial statements of insurance companies listed on the Amman Stock Exchange for the period spanning 2016 to 2022, thereby constituting our dependent variable. Rigorous statistical techniques were employed to meticulously analyze the collected data, with the validation of our hypotheses achieved through a comprehensive multiple regression analysis. The findings of this study distinctly underscore the pivotal role played by entrepreneurial accounting practices in ameliorating information asymmetry issues within the corporate economic landscape. A robust and statistically significant correlation emerged between our dependent variable, namely the reduction of information asymmetry, and both the independent variables associated with entrepreneurial accounting practices and their inherent characteristics. This study's significant recommendation extends beyond the mere technical dimensions of accounting, encompassing a call for a holistic reevaluation of the accounting profession. Addressing the enduring phenomenon of information asymmetry among stakeholders is not merely a concern confined to the technical aspects of accounting. Rather, it represents a profound professional and ethical crisis that permeates the entire accounting ecosystem. This crisis emanates from the very foundations and legal frameworks of the profession, extends through accounting standards, and encompasses professional conduct and ethics. Ultimately, it concludes with the supervision and oversight of the quality of professional performance, an obligation shared by accountants, certified auditors, and management alike.

The Successful Experience on Facing Information Asymmetry?—Cash Cards in Taiwan

With the opening of the establishment of new banks in the 1990s, it led to an excessive number of domestic bankers and an excessively small scale, which caused a decline in the quality of financial assets and eventually resulted in adverse selection and moral hazard under information asymmetry in the domestic cash card market, triggering a card debt crisis and serious social problems. This article examined whether the phenomenon of information asymmetry was improved after the competent authority intervened. The results highlighted the important position of the competent authority in financial institution management and made information asymmetry improved eventually.

Digital twin data-driven proactive job-shop scheduling strategy towards asymmetric manufacturing execution decision

The information asymmetry phenomenon widely exists in production management decisions due to the latency of manufacturing data transmissions. Also, stochastic events on the physical production site will result in information asymmetry, which may lead to inconsistency between current execution and previous resource allocation plans. It is meaningful and important for developing an information model based on the Internet of Manufacturing Things to timely and actively adjust the scheduling strategy to meet the symmetry requirements of the production execution process. Based on the digital twin data collected from the workshop, a proactive job-shop scheduling strategy was discussed in this paper. Firstly, the mechanism for the influence of delayed local operations on makespan was deduced. Then, a framework for implementing the proactive job-shop scheduling strategy was proposed. Coordination point was used to determine the adjustment interval of local operations; right-shift rule with delay time constraints was used to adjust the unprocessed operation sequences on machines. Finally, the examples including 6*6 (6 jobs, 6 machines) and 20*40 (20 jobs, 40 machines) were presented to verify the effectiveness and scalability of the proposed method. It can be predicted that the proactive scheduling strategy provides the online decisions for the efficient and smooth execution of the digital twin-driven workshop production.

АНАЛІЗ ВПЛИВУ ІНФОРМАЦІЙНОЇ АСИМЕТРІЇ НА ПРОЦЕС РЕАЛІЗАЦІЇ НАЦІОНАЛЬНИХ ЕКОНОМІЧНИХ ІНТЕРЕСІВ

The article notes that information asymmetry is provoked by the unevenness of digital processes, which affects the country's competitive position on the world stage. The author examines Ukraine's position in the ranking of countries by indicators of global digital competitiveness, which demonstrate the manifestations of information asymmetry and polarize the world into leaders and outsiders in terms of the level of development of the information society. The author's vision of the factors that provoke information asymmetry is outlined, which, in the process of their corrective management influence and solving problematic aspects, form a vision of the vector of the national economy, the priority of concepts and targeted measures of the information economy. The information asymmetry by areas and nature of influence on the process of realization of national economic interests is studied. It is proved that within the same sphere of information asymmetry several processes with different vectors can function. The author outlines the conflicts of interest provoked by information asymmetry in the system of level organization of economic relations, since it prevents the effective redistribution of wealth produced by the latest knowledge and modern innovative and information technologies from more successful countries, industries, productions, and spheres of activity to less progressive ones. It is noted that the unresolved conflict situations in the multilevel structure of economic relations contribute to the deepening of negative manifestations of information asymmetry. Management measures to eliminate the negative manifestations of information asymmetry in the perspective of achieving key national interests are outlined. It is proved that the phenomenon of information asymmetry is manifested in: determining its essence and economic content; dualistic manifestation of influence on the process of realization of national interests in the system of economic relations; causal movement of information asymmetry; in the legislative consolidation of information asymmetry, which is manifested in the restriction of access to information in the areas related to state and commercial secrets.

Digital Twins-Based Smart Design and Control of Ultra-Precision Machining: A Review

Ultra-Precision Machining (UPM) is a kind of highly accurate processing technology developed to satisfy the manufacturing requirements of high-end cutting-edge products including nuclear energy producers, very large-scale integrated circuits, lasers, and aircraft. The information asymmetry phenomenon widely exists in the design and control of ultra-precision machining. It may lead to inconsistency between the designed performance and operational performance of the UPM equipment on stiffness, thermal stability, and motion accuracy, which result from its design, manufacturing, and control, and determine the form accuracy and surface roughness of machined parts. The performance of the UPM equipment should be improved continuously. It is still challenging to realize the real-time and self-adaptive control, in which building a high-fidelity and computationally efficient digital twin is a valuable solution. Nevertheless, the incorporation of the digital twin technology into the UPM design and control remains vague and sometimes contradictory. Based on a literature search in the Google Scholar database, the critical issues in the UPM design and control, and how to use the digital twin technologies to promote it, are reviewed. Firstly, the digital twins-based UPM design, including bearings module design, spindle-drive module design, stage system module design, servo module design, and clamping module design, are reviewed. Secondly, the digital twins-based UPM control studies, including voxel modeling, process planning, process monitoring, vibration control, and quality prediction, are reviewed. The key enabling technologies and research directions of digital twins-based design and control are discussed to deal with the information asymmetry phenomenon in UPM.

إطار مقترح لتحسين محددات جودة الأرباح وأثره على تکلفة رأس المال باستخدام منهجية النمذجة بالمعادلة البنائية.دراسة تطبيقية

ملخص:- تعد جودة الأرباح من العوامل الرئيسة التى يمکن من خلالها الحکم على دقة المحاسبية، وتقلل من عدم تماثلها، والتى بدورها تؤثر على تکلفة رأس المال للمنشأة ککل. ويتلخص موضوع البحث فى محاولة وضع إطار مقترح يبين علاقة کل مقياس من المقاييس محل الدراسة والتى تؤثر على جودة الأرباح، بالاضافة إلى دور جودة الأرباح فى تخفيض عدم تماثل المعلومات، حيث أنه من بين المخاطر التى يمکن أن تضعف من تکلفة رأس المال ظاهرة عدم تماثل Asymmetry، حيث تعد محدودية بمثابة خطر يواجه المنظمة يطلق عليه مخاطر المعلومات وبيان أثر ذلک على تکلفة رأس المال للمنشأة ککل، حيث تختلف تکلفة رأس المال بإختلاف درجة المخاطرة المرتبطة بکل منها،. ورأى الباحث ضرورة استخدام منهجية النمذجة بالمعادلة البنائية وذلک لتحديد الآثار المباشرة وغير المباشرة للمتغيرات الکامنة محل الدراسة، والتى تتمثل فى جودة الأرباح وعدم تماثل المعلومات، وبيان أثرها على متغير الدراسة الظاهر والذى يتمثل فى تکلفة رأس المال. Summary: Earnings Quality is one of the main factors through which it is possible to judge the accuracy of accounting information, and reduce its asymmetry, which in turn affects capital cost for the enterprise as a whole. The research topic is summarized in an attempt to develop a Suggested framework that shows the relationship of each of the measures under study that affects Earnings Quality, in addition to the role of Earnings Quality in reducing the risks of asymmetry of information, as among the risks that can weaken the cost of capital is the phenomenon of Information Asymmetry, where the limited is considered as a facing the organization called information risk and explaining the effect of this on the cost of capital for the enterprise as a whole. The cost of capital varies according to the degree of associated with each of them.The researcher considered the necessity of using structural Equation Modeling in order to determine the direct and indirect effects of the Latent variables under study, which are represented inEarnings Quality, and Asymmetry of information, and to show their impact on the Manifest variable, which is the cost of capital.

DEFORMATION OF CONSUMER DEMAND UNDER THE INFLUENCE OF ARTIFICIAL INFORMATION ASYMMETRY

Background. The formation of the information economy has stimulated eco­nomic entities to form and operate artificial information asymmetry, which highlights the importance of research in this problematic area. Analysis of recent research and publications. Information asymmetry has become the subject of research by a number of Nobel laureates and less-known econo­mists who have studied the effects of artificial information asymmetry in the system of "principal-agent" relations, competitive, contractual relations, and so on. The aim of the article is to determine the mechanism of influence of artificial information asymmetry on consumer demand. Materials and methods. The research is based on the theoretical and economic analysis of scientific works of researchers of the phenomenon of information asymmetry, as well as the analytical processing of statistical data. Graphic modelling of the influence of manipulative practices of creating artificial information asymmetry on the consumer value of economic good is carried out. Results. Deceptive commercial practices are becoming increasingly popular in the information economy, making it possible to critically increase the consumer value of economic benefits in terms of its emotional component. At the same time, the use of digital algorithms for consumer identification and collection of consumer histories allows the most productive exploitation of the corresponding increase in consumer value, converting it into additional income by means of price personalization. Conclusion. Regardless of the tool used to increase information asymmetry between buyers and sellers of consumer goods, the mechanism of its deforming influence remains unchanged: the primary deformation is subjective assessment of the total utility of con­sumption of goods, which causes overestimation of the emotional component of its consumer value, resulting in deformed consumer demand, the reserve price of the corres­ponding good increases, and with it - the personalized price of its sale for the concrete consumer.

Шляхи вирішення агентської проблеми в корпоративному управлінні: роль бухгалтерського обліку

The expedience of conducting scientific researches in the direction of solving the agency problem in corporate management is grounded. The historical aspects of the formation of theoretical foundations of the phenomenon of information asymmetry are considered. The types of information asymmetry and their characteristics are analyzed. The influence of the effects of information asymmetry (unfavorable selection, moral hazard, retention) on the activity of corporate structures is considered. The ways of minimizing the negative impact of the agency problem on the activity of corporate structures are analyzed. Two groups of researchers’ approaches to solving the agency problem are identified in the context of the existence of a normative-positive dichotomy regarding the methodology of research. The necessity of taking into account the peculiarities of the internal and external environment of the corporate structure in the process of choosing methods to minimize the negative consequences of the agency problem is substantiated. The ways to improve accounting in the direction of minimizing the negative consequences of the agency problem are identified.

ІНФОРМАЦІЙНА АСИМЕТРІЯ В СВІТОВІЙ ЕКОНОМІЦІ

The article is devoted to studying the phenomenon of information asymmetry in the world economy. It is postulated that information asymmetry has existed in the world economy since the birth of international relations – however, with the accelerated introduction of information technology, it becomes more and more pronounced, and the significance of its effects grows. According to the results of researching the existing theoretical approaches, it is proved that without the free movement of information, it is impossible to move goods, services and financial assets freely. The main factors that cause information asymmetry are identified. The main reasons that prevent the free access of economic subjects to information are analyzed: misinterpretation of information due to lack of competence, conditions of secrecy on certain information; formation of a state-bounded symmetric information field; the international level of information is not always characterized by relevance because of its scale. It is proved that the main incentives for the growth of information asymmetry are deliberate distortion, silence, or lack of the necessary methodological basis for identifying trends in predictions of situations in the world economy. The main policy approaches to benefit from reducing information asymmetry are classified. It is determined that in the absence of regulation, information asymmetry creates conditions for an oligopolistic domination of China and the US, through the formed global value chains. The findings suggest that information in the global economy is a source of competitive advantage for firms in developing countries, and trade deals still retain the pioneering advantages of dominant players. It is proposed to regulate the flow of information generated domestically through: the creation of a digital industry, while solving the problems of market concentration and taxation in the economy; by digitizing and integrating information into value chains. It is desirable that the legal regulation of the information field takes into account the specificity of countries. But on the other hand, it may be easier to regulate international data flows as a way to promote innovation and trade, as information asymmetry increases costs and reduces efficiency in the field. Further scientific and methodological researches of the author will be devoted to the study of these aspects of information asymmetry in the world economy.

CEO succession puzzle in the Polish capital market

PurposeThe purpose of this paper is to analyse the market reaction to the appointments of chief executive officers (CEOs) in companies listed on the Warsaw Stock Exchange. The authors focussed on the relationship between the characteristics of a newly appointed CEO and the shareholders’ reactions to the appointment of a CEO.Design/methodology/approachTo measure shareholder reaction, the authors apply an event study methodology. The determinants of reaction are identified on the basis of multi-regression analysis.FindingsThe results reveal a negative market reaction to all CEO appointments, both new appointments and reappointments. Investor reaction is driven more by the financial condition of the company, the company’s market performance and the free float, than by the characteristics of a newly appointed CEO. Neither the origins and generation (age) nor the gender of a CEO influence share prices. The relationship between the educational background of a CEO and shareholders’ reactions is mixed. Furthermore, the appointment of an inexperienced CEO seems to be preferred by investors.Research limitations/implicationsThe study is restricted by certain limitations related to the adopted measures, the single-market research, data gaps and the selection of variables for regression analysis. A further cross-country study including Central and Eastern Europe and/or the transition economies of the Baltic Region is recommended. The relationship between the operating performance of a firm and its internal control mechanisms could be explored.Practical implicationsThe findings might influence the decisions made by company owners and supervisory boards when appointing top executives, and might contribute to a better understanding of how CEO appointments can affect shareholder value creation. The results also provide important guidelines for institutions that oversee the financial system.Originality/valueThe findings of this study are expected to the findings are expected to contribute to the literature on the empirical analysis of the shareholder wealth effect, on signalling theory, on the phenomenon of information asymmetry and on corporate governance. The study covers a full economic cycle of the capital market, including the financial crisis and financial bubbles, and it fills a gap in the research regarding emerging markets and transition economies in Europe.

Model przyczynowy zjawiska asymetrii informacji w informatycznym przedsięwzięciu wdrożeniowym

The author’s research to date has shown that information asymmetry constitutes a critical success factor both for the client and the supplier in IT information projects. Literature confirms that the phenomenon of information asymmetry between the client and the supplier in IT projects is hard to measure due to problems in accessing credible information and the lack of established methods. Hence, it is important to study the phenomenon of information asymmetry and to understand the conditioning that affects it. The aim of the article is to present a model describing the causes of information asymmetry in IT implementation projects completed through outsourcing. The author studies information asymmetry in the project life cycle of ERP, CRM, BI and DM systems. The conclusions may be interesting both for economic practitioners and for theoreticians of business economics.

Deposit insurance in the EU: Repetitive failures and lessons from across the Atlantic

This article outlines weaknesses in the EU deposit insurance legal framework and proposes necessary amendments in its substantive rules to enhance the system’s ability to ensure financial stability by preventing bank runs. It first examines the overall relationship between systemic liquidity risk and bank runs, the relevant systemic events and transmission channels, stressing the information asymmetry phenomenon, and claiming that it is valid for all depositors. The article presents the main elements of the safety net against systemic liquidity risk and highlights the crucial role of deposit insurance. It also provides a practical example of several bank runs on both sides of the Atlantic, illustrating that the EU rules are less apt to prevent them. A comparison is drawn between the current EU and US legal frameworks of deposit insurance. That analysis, together with the practical case studies, elucidates the shortcomings of the EU legislation with respect to coverage, payout periods and funding mechanisms. Key amendments, related to wider overall deposit coverage, faster payout periods, and higher deposit insurance fund ratio backed with a governmental guarantee, are proposed.

A Study on the Coping Strategy of Financial Supervisory Organization under Information Asymmetry: Case Study of Taiwan's Credit Card Market

Information asymmetry has been a commonly existed phenomenon in banking system. This paper adopted consumer finance data from both government-owned and private- owned banks in Taiwan, variables such as numbers of effective cards, percentages of overdue loans, and revolving interest rate are used to investigate if information asymmetry phenomenon existed in Taiwan's credit card market. During the research period, Taiwan had suffered from severe crisis of credit card debt, financial supervisory organization interfered into the credit card market passively, hoping to improve the information asymmetry phenomenon of the credit card market. However, the research results show that not only information asymmetry phenomenon has not disappeared from Taiwan's credit card market, but worsen the adverse selection phenomenon and promoted moral hazard in certain degree.

Obowiązki informacyjne na głównym parkiecie GPW oraz na rynku NewConnect – analiza porównawcza

Nie sposób jest wyeliminować zjawiska asymetrii informacji na współczesnym ryku kapitałowym. Aby ograniczyć jego negatywne skutki nakładane są przez organizatorów obrotów instrumentami finansowymi obowiązki informacyjne. Emitenci papierów wartościowych na głównym parkiecie GPW oraz na alternatywnym systemie obrotu NewConnect są zobowiązani prezentować podstawowe dane o przedsiębiorstwie, jego stanie posiadania jak również okresowe raporty z jego bieżącego funkcjonowania oraz prospekty emisyjne. Z uwagi na charakter poszczególnych rynków obowiązki te są mniej lub bardziej restrykcyjne. Celem artykułu jest dokonanie porównania obowiązków informacyjnych pomiędzy rynkami akcyjnymi prowadzonymi przez GPW SA oraz dokonania oceny słuszności zastosowania danych rozwiązań. W artykule stawia się tezę, że bardziej restrykcyjne wymogi informowania akcjonariuszy dotyczące zmian dotykających spółkę giełdową mają bezpośrednie przełożenie na transparentność oraz ocenę jakości rynku w oczach inwestorów. Badanie zostało przeprowadzone poprzez dokonanie analizy porównawczej opartej na regulaminach obu parkietów oraz aktualnie obowiązującym stanie prawnym.

A Study of Impact of Ownership Structure and Disclosure Quality on Information Asymmetry in Iran

Executive Summary Capital market uses financial information with high disclosure quality, and this information can influence capital market decision-making. Corporate governance research shows that ownership structure can influence financial reporting quality, and thus play an effective role in capital market decision-making. The main purpose of the current study is to examine the impact of ownership structure and disclosure quality on the information asymmetry phenomenon among the listed companies on the Tehran Stock Exchange (TSE). Ownership structure (including ownership concentration and institutional ownership) and disclosure quality (including reliability and timeliness) are considered as independent variables, and their impact is examined on the dependent variable (information asymmetry). Consistent with extant literature, bid-ask spread is used as a proxy variable for information asymmetry. The statistical results, based on data collected from 102 listed companies on the TSE during 2007–2014, revealed positive impact of ownership structure and negative impact of disclosure quality on information asymmetry. These results show that information asymmetry is less in firms that published more reliable and timely information, and is more in firms with more concentrated ownership structure, higher institutional ownership, and lower disclosure quality. In other words, reliability and timeliness of information have a positive role in stock price identification and close-up views of the buyer and seller in TSE. Findings of this article can assist accounting researchers and theoreticians in comparing real world facts with hypotheses developed with respect to ownership structure, disclosure quality, and information asymmetry. By increasing transparency in the capital markets, market participants, decision-makers, financial analysts, and potential investors are aided in their analysis of plans for investments in financial assets.

Hierarchical Decision-Making With Information Asymmetry for Spectrum Sharing Systems

In this paper, observing the information asymmetry phenomenon among multiple secondary users (SUs) spectrum sharing, we analyze the hierarchical decision-making and the strategic interaction of information-poor and information-rich SUs. A Stackelberg capacity-maximization game is formulated with leaders and followers, and closed-form solutions are mathematically derived for the optimal Stackelberg equilibrium solution. Moreover, the existence and uniqueness of equilibrium solutions are investigated via the quasi-variational inequality method. Finally, the distributed algorithm with partial asymmetric information awareness is designed to reach the solution. Numerical results demonstrate that the proposed algorithm achieves improved individual and system performance with mild condition on the ratio of information-poor leaders and information-rich followers.

PATIENTS’ AND PHYSICIANS’ OPINION ON HEALTHCARE REFORM IN BULGARIA

BACKGROUND. Bulgarian health system is undergoing fundamental organizational changes started since 1998 with the adoption of three new fundamental laws - Health Insurance Act (1998), Health Care Establishments Act (1999) and Law for professional organizations of physicians and dentists (1998). The new legislation laid the foundations of radical transformation of financing and delivery of health services to the population with introduction of market mechanisms for resource management. The aim of this paper is to analyse the acceptance and critical evaluation of Bulgarian health reform based on patients’ and physicians’ opinion. METHODS. The study was carried out in 2010 in 9 randomly selected urban regional centres. From 18 outpatient medical centres and 11 hospitals the samples of 1863 patients and 718 physicians were chosen by convenience. The data were collected by self-administered questionnaire of 26 open-ended questions encompassing identification data, questions about awareness, expectations, acceptance and satisfaction with different aspects of health reform. RESULTS. Significant differences in responses concerning the information and awareness on main aspects of health reform were found in favour of physicians and low level of knowledge for patients. Both groups demonstrated unrealistic and maximalist over expectations for rapid and large increase in the quality of medical services significantly higher in the group of physicians except for the physicians’ wages. Much lower were the expectations about the negative effects that really occurred during the process of reform. Conclusions. Significant unawareness on various aspects of reform was demonstrated among respondents more explicit in the group of patients. The phenomenon of information asymmetry is the leading factor for the failure of health reform and serious changes should be undertaken to increase the public and professional acceptance and satisfaction of the health reform. Keywords: Bulgaria, healthcare reform, patients’ opinion, physicians’ opinion, information asymmetry