Reduce Information Asymmetry Research Articles

Fintech, financing constraints and corporate green innovation

This study comprehensively analyzes the panel data of 4195 listed companies in the A-share market during the period from 2011 to 2022, aiming to explore the mechanism of fintech's influence on corporate green innovation. The study adopts a two-way fixed effects model to confirm the positive association between fintech and corporate innovation, and reveals the role of fintech in promoting corporate innovation output by alleviating financing constraints with the help of a mediated effects model. The findings suggest that FinTech not only directly promotes firms' innovation activities, but also provides important support for firms' innovation by reducing financing constraints, a finding that is confirmed by a series of robustness tests.On this basis, this paper emphasizes that, in the face of market changes brought about by fintech, firms should proactively adapt to and take advantage of these changes to mitigate the pressure of high costs of external financing by maintaining good credit records and reducing information asymmetry. Such a strategy not only helps firms obtain more funds for R&D and innovation, but is also key to achieving sustainable development goals. In addition, policymakers should also recognize the important role of fintech in promoting business innovation and green transformation and take measures to encourage its development and application for the long-term health of the economy.

Government certified environmental labels and trade credit: Evidence from green factories

Using novel data from a manually collected green factory list, our results show government-certified labels significantly enhance trade credits by reducing information asymmetry. Heterogeneity analysis reveals stronger effects in highly monopolized, low-reputation markets, where green certification provides a competitive advantage.

The impact of government data accessibility on cross-regional venture capital investments

This study examines the association between government data accessibility and venture capital (VC)'s cross-regional investments. Exploiting the staggered establishment of government data open platforms (GDOPs) across different cities in China as a positive shock to government data accessibility, we find that this policy significantly increases cross-regional VC investments in treatment cities relative to others. Furthermore, the positive impact is achieved through the reduction of information asymmetry, as the establishment of GDOPs attracts VC investments from greater geographical distances. Additionally, we find a more pronounced positive effect of GDOPs on promoting cross-regional VC investments in regions with higher terrain ruggedness and lower fiscal transparency. Overall, this study demonstrates that the government's informatization and transparency initiatives can positively influence financial markets by enhancing the cross-regional flow of financial capital.

Blockchain-based food traceability system and pro-environmental consumption: A moderated mediation model of technology anxiety and trust in organic food product

Blockchain technology is increasingly recognized as a transformative tool for enhancing clarity and responsibility in the organic food supply chain, where concerns about product authenticity and safety are paramount. By offering provable and translucent information about the origination, production processes, and administration of organic items, blockchain helps to reduce information asymmetry and builds consumer trust, which is critical for purchase decisions in the organic food market. Drawing on insights from the trust theory and the stimulus-organism-response framework, this study uses a moderated mediation model to explore how technology anxiety negatively moderates the direct and indirect influences of blockchain-based food traceability systems on trust in organic food products and organic food purchase intention. Using a targeted sample of 5326 consumers in Vietnam, the PROCESS macro approach (models 8 and 4) is utilized to examine the formulated hypotheses. The results demonstrate that blockchain-based food traceability systems notably enhance consumer trust in organic food products and their intention to buy these products. Trust in organic food products serves as a mediator in the connection between blockchain-based traceability and purchase intention, while technology anxiety weakens the positive impacts of blockchain technology on trust and purchase intention when anxiety levels are high. This research makes crucial contributions to the literature by offering a mechanism-based explanation of how blockchain technology enhances consumer trust in organic food products and integrates technological anxiety as a moderator, providing a deeper understanding of how technological innovations shape consumer behavior. In light of the findings, several critical recommendations have been proposed for practitioners and policymakers.

Market Valuation of Risk Reporting: The Role of Business Model Disclosure

Narrative risk reporting is essential to providing investors with information about company risks. Recent regulations require large companies to disclose narrative information about their main risks, opportunities, and business model (BM) value drivers. While only minimum disclosure requirements are defined, principle‐based guidelines have suggested that companies contextualize risk disclosure by linking it to BM information. Hence, this study investigates the level of integration of BM reporting and risk reporting, and the consequences of such an integration on market values. This research analyzes the annual reports of a sample of UK‐listed companies over four years. Risk disclosure indexes are developed to capture the quality and integration of risk information, and value‐relevance analyses are carried out to investigate the impact of risk reporting on market values. The analyses indicate that narrative risk information is value relevant only when integrated with BM reporting. Additional analyses show that risk information is associated with reduced information asymmetry but only when disclosed risk factors are related to BM information. Hence, BM disclosure can serve as a filter to identify and interpret the most relevant company's risks. The results are valuable to various stakeholders, including academics, standard setters, and professional bodies. The study's policy implications suggest the need to develop guidelines clarifying the definitions of BM and risk and ways to integrate the narrative information, in light of recent regulatory developments in the EU.

Effect of Institutional Ownership and Audit Committee to Underpricing in Indonesian Stock Exchange

Underpricing is a phenomenon that remains unresolved. Between 2015 and 2022, 83 percent of companies listed on the Indonesia Stock Exchange (IDX) experienced underpricing. Information asymmetry is often cited as the primary reason for underpricing during the Initial Public Offering (IPO) process. The audit committee and institutional ownership are crucial indicators in reducing information asymmetry between issuers, underwriters, and investors. This study aims to examine the consistency of the application of the audit committee and institutional ownership in influencing underpricing, using a sample of 304 companies that experienced underpricing between 2015 and 2022.

The Impact of Supply Chain Network Centrality on Sustainable Mergers and Acquisitions: Evidence from China

Mergers and acquisitions (M&As) are key drivers for resource integration and the operational efficiency of enterprises. Companies that hold central positions within supply chains may leverage their strategic location to reduce information asymmetry, enhancing their ability to engage in sustainable activities. However, research on the role of supply chain network centrality in M&A decisions remains underexplored. This study aims to empirically examine whether and how centrality in supply chain networks enhances the likelihood and success of M&A activities, contributing to both theory and practice in corporate strategy. In particular, we construct a novel measure of firm centrality within the supply chain and utilize panel data from Chinese A-share listed companies spanning 2008 to 2021. Our findings reveal that the central position of supply chain networks promotes the probability and frequency of mergers and acquisitions. Mechanism analysis reveals that gaining information advantages and relieving financial constraints are two key channels through which the supply chain network promotes mergers and acquisitions. Furthermore, the effects are more pronounced for firms with non-state ownership, with closer proximity to customers or suppliers, with higher operational risk, and with growth and decline phases. A series of robustness tests support these results, including alternative measures, alternative estimating methods, and sub-sample tests. Moreover, central supply chain companies exhibit better long-term financial performance following mergers and acquisitions. This paper enriches our understanding of the roles of supply chain networks in firms’ mergers and acquisitions and holds important practical implications for companies seeking to achieve sustainable and long-term development.

Private entrepreneurs’ technical background and innovation output: The perspective of innovation quantity and quality

This study investigates the impact of entrepreneurs' technical backgrounds on innovation output from the perspective of innovation quantity and quality, using data from A-share listed private companies in China between 2009 and 2018. Our analysis reveals that CEOs with technical expertise significantly enhance both the quantity and quality of firm innovation. We identify three key mechanisms through which technical backgrounds promote innovation: increased management attention to innovation, reduced information asymmetry, and enhanced long-term investment. These findings contribute to the literature on Upper Echelons Theory and corporate innovation, offering practical insights for private enterprises aiming to achieve talent-driven technological innovation and foster high-quality development.

The Impact of Fintech on Urban Industrial Pollution: A Quasi-Natural Experiment Based on Pilot Policies Integrating Technology and Finance

Against the backdrop of accelerating global industrialization and the increasingly severe issue of industrial pollution, reducing industrial pollution has become a key topic in sustainable development. Fintech, with its advantages of high efficiency, low cost, inclusiveness, and ability to reduce information asymmetry, has gained widespread attention and rapid development globally. Given the swift advancement of fintech, it is important to study its impact on urban industrial pollution. This paper, based on data from 281 Chinese cities between 2007 and 2021, selects cities included in the 2011 and 2016 "Technology and Finance Integration" pilot policies as the treatment group. Using a difference-in-differences model, it systematically analyzes the relationship between the development of fintech and urban industrial pollution. The study further explores the variations in fintech's impact on industrial pollution across different regions and types of cities, revealing the potential of fintech in promoting green transformation and reducing industrial pollution.

Does Soft Information Mitigate Gender Bias in Corporate Lending?

AbstractGender bias in leadership and decision-making is a well-documented and pervasive topic that continues to garner significant attention in academic research and business literature. In this paper, by exploiting a unique proprietary dataset of 550 mid-corporate loan applications managed by a major European bank, we explore how the use of soft information influences lending decisions of female loan officers as compared to their male counterparts. We find that use of soft information reduces information asymmetry which helps female officers in making diligent lending decisions resulting in increased granted credit with a lower default probability. We also investigate gender affinity within the banking organisation and find that female loan approvers are more likely to be supportive of their subordinate female loan officers by approving more credit to the loan applications handled by female loan officers. Finally, we examine the possible mechanisms that can explain these results, and find that female loan officers are able to better collect and use soft information as they cultivate and maintain deeper firm-bank relationships with their clients due to higher threat of losing or being penalized in their jobs for any possible errors. We also rule out any other possible explanations such as differences in workload, work experience, loan officers’ optimism, managerial ability, and screening capabilities between female and male loan officers. Our findings carry important policy implications, reflected in the optimal allocation of capital in the economy and the reduction of gender-related exclusion, which is vital in creating an equitable society and fostering a more ethical and inclusive workplace.

Can investor-firm interactions mitigate ESG rating divergence? Evidence from China

This study empirically examines whether investor-firm interactions significantly influence the ESG rating disagreement among A-share listed companies in China. We use Q&A data between 2015 and 2021 from the Easy Interaction and E-Interaction platforms of the Shenzhen and Shanghai Stock Exchanges (SZSE and SSE). Our results reveal that investor-firm interaction can significantly reduce the ESG rating divergence, and this result remains robust after robustness tests. The mechanism test suggests that interactions related to ESG theme can improve the ESG disclosure quality and increase ESG practices; this leads to reduced information asymmetry, thus easing rating divergence. Further, the effect is more pronounced when listed companies' ESG disclosures are similar to those in their industry, non-centralized enterprises, low corporate governance level, and fewer green investors. From the ESG rating divergence mitigation perspective, this study provides empirical evidence on the economic consequences of emerging capital markets regarding investor-firm interactions.

Do Investors’ Site Visits Improve Bond Market Pricing Efficiency? —An Empirical Study from the Secondary Bond Market

ABSTRACT Taking bonds issued by A-share companies listed on the Shenzhen Stock Exchange from 2014 to 2020 as a sample, this paper explores the effect of corporate site visits on bond trading spreads. The study finds that the more investors visit a given firm, the lower the trading spreads of bonds issued by that firm, and this phenomenon is more pronounced in companies with greater information asymmetry or agency conflicts. Further research shows that investors evaluate the financial status of the company more accurately through site visits and reduce irrational decisions caused by information uncertainty. Consequently, site visits reduce the financing gap caused by macroeconomic factors. The results show that personal communication between investors and listed companies could provide effective information for bond investors and reduce their information risk. This paper expands the existing research on issues related to secondary bond market pricing and investors’ site visits and provides important empirical evidence for regulators to use to further optimize the bond market disclosure system to reduce information asymmetry.

Industrial robot use and corporate real earnings management: Evidence from China

Industrial robots (IRs) are becoming an increasingly important production technology in the global manufacturing industry. Using Chinese A-share listed manufacturing companies as a research sample, this study identifies that using IRs significantly restricts corporate real earnings management (REM). Specifically, IRs reduce information asymmetry, improve product market performance, and enhance the incentive effect of executive compensation, thereby weakening executives’ self-benefit motives and increasing the cost of implementing REM. These findings underscore the role of IRs in corporate governance, allowing for a better understanding of robots’ microeconomic consequences and guiding future corporate governance practices.

The importance of test order in external and standardized test results: The case of PISA 2018.

Standardized tests intend to reduce information asymmetry by providing a common and objective measure of students' academic performance. The basic assumption underlying standardized testing is that differences in student performance on standardized tests should be attributed primarily to differences in the quality of education received by students. However, there is evidence that environmental factors can affect standardized test scores, which may result in anomalous observations or outliers that show a distortion of student performance. In this regard, the exclusion of Spain from PISA 2018 is particularly interesting as Spanish data met PISA 2018 Technical Standards but showed implausible student-response behavior. The aim of this paper is to complement the OECD's analysis of Spain's exclusion from PISA 2018 by exploring the potential reasons behind the outlier results, focusing on the Madrid region.

Social media, investor‒firm interactions and informational efficiency of stock prices: Evidence from China

Using a sample of Chinese listed companies from 2010 to 2022, we examine how investor‒firm online interactions influence informational efficiency of stock prices. The empirical results indicate that investor–firm online interactions significantly enhance informational efficiency. After conducting a series of robustness checks, the conclusions remain valid. Mechanistic analysis demonstrates that investor–firm online interactions enhance informational efficiency primarily by reducing information asymmetry and correcting stock mispricing. We emphasize the critical importance of retail investor–firm online interactions within social media platforms in promoting informational efficiency of stock prices.

Roadmapping Roadmapping: Strategic planning for roadmapping systems

Roadmapping is a well-established technique in the context of innovation and strategy, with the potential to support organizations address the complex transformative challenges facing humanity in the 21st century. This is enabled by its systems-based architecture and visual form of roadmaps, supporting communication and reduction of information asymmetries in complex sociotechnical systems. This paper focuses on an adaptation of the roadmapping method to support strategic planning for roadmapping systems in organizations, addressing implementation challenges. This represents a novel application of roadmapping to business processes and systems, demonstrating the flexibility of the roadmapping approach. A workshop template (‘R2’) and process for supporting the roadmapping of roadmapping systems is presented, developed and refined through a series of six industrial cases, and illustrated with an application example in the additive manufacturing sector.

China's Foreign Exchange Market: Research on Problems and Countermeasures

The foreign exchange derivative market plays a vital role in the global economy. As one of the world's largest economies, China has already recognized the significance of establishing a well-regulated foreign exchange market. However, the Chinese foreign exchange market still faces several challenges. There are four main challenges: regional disparities in development, low level of diversification, high market risks, and inadequate regulation. These issues should draw public’s further attention and get resolution. This paper aims to analyze the four problems above in China's foreign exchange derivatives market and propose feasible solutions, including alleviating the imbalance problem, strengthening market diversification, reducing information asymmetry and strengthening the government supervision, which help to address the identified problems. The research findings are also helpful for some market participants and policymakers to understand the shortcomings of China's foreign exchange derivatives market better, and thus designate more rigorous trading strategies and improve the environment for China's foreign exchange derivatives market.

Does FinTech efficiently hamper manipulating ESG data behavior?

Understanding the impact of FinTech on firms' greenwashing behavior is essential for the advancement of green finance. This paper utilizes data on Chinese listed firms from 2011 to 2021 to illustrate how FinTech impacts the firms' greenwashing behavior. Our main finding is that FinTech inhibits firms' greenwashing behavior through two mechanisms: externally, by reducing information asymmetry and financial constraints, and internally, by increasing total factor productivity (TFP) and operational efficiency. Heterogeneity tests show that FinTech significantly reduces greenwashing behaviors in high-tech firms, highly polluting firms, firms with environmentally conscious executives, and firms located in provinces with high levels of FinTech development, government intervention, and low industrialization. This paper reveals how FinTech drives firms' ESG performance and curbs insincere ESG behaviors and aims to unpack the “black box” of how FinTech influences greenwashing behaviors.

Blockchain Technology Application and Potential in the Global Securities Trading Market

With the rapid development of financial technology, blockchain technology is gradually permeating the global securities trading market. This paper delves into the current status of blockchain technology applications in this field, covering key aspects such as trade settlement and clearing, securities issuance and trading, identity verification, and compliance management. Through detailed case studies, it powerfully demonstrates its significant reduction in settlement cycles and intermediate links, thereby improving trade efficiency; its substantial reduction in operational costs and additional expenditures due to human errors, thereby lowering costs; and its effective resistance to cyber-attacks through data encryption and tamper-proof characteristics, thereby enhancing security. At the same time, it explores the positive role of blockchain technology in improving market trust by offering transparent transaction records and reducing information asymmetry. The paper further analyzes the challenges faced by blockchain technology in the global securities trading market, including issues with technology maturity such as performance scaling and interoperability, regulatory and compliance issues such as incomplete legal frameworks and policy uncertainties, industry acceptance issues such as conservative attitudes from traditional institutions and insufficient technology popularization education, and security risks such as emerging vulnerabilities and private key management risks. On this basis, it provides a forward-looking outlook on the potential and development trends of blockchain technology in the global securities trading market in the future, including integration trends with other emerging technologies, its role in promoting cross-border transactions and financial market integration, the possibility of innovative financial products and services, and the resulting changes in market patterns. In summary, this paper provides a comprehensive and systematic study of the current status, advantages, challenges, and future development of blockchain technology in the global securities trading market, offering valuable references and insights for further development in this field.

The impact of ESG rating disagreement on corporate risk-taking: evidence from China

This paper examines the impact and underlying mechanisms of ESG rating disagreement on the risk-taking of Chinese companies listed on the Shanghai and Shenzhen stock exchanges from 2011 to 2020. The research reveals that ESG rating disagreement significantly increases corporate risk-taking. Mechanism tests show that corporate ESG rating disagreement can enhance corporate risk-taking by reducing information asymmetry and alleviating financing constraints. Further analyses find that the agency costs affect the enhancing effect of ESG rating disagreement on corporate risk-taking. Heterogeneity analysis reveals that ESG rating disagreement has a greater effect on corporate risk-taking for non-state-owned firms, small-sized firms, and young firms. This paper provides empirical evidence to promote the construction of China's ESG rating system and enhance corporate risk-taking.