Reduce Information Asymmetry Research Articles

Corporate Governance in the Digital Age: A Comprehensive Review of Blockchain, AI, and Big Data Impacts, Opportunities, and Challenges

This research examines the intersection of disruptive technologies specifically blockchain, AI, and Big Data with corporate governance, synthesizing insights from a diverse range of scholarly works. This research employed a comprehensive literature review methodology. We sourced and analyzed scholarly articles and papers from prominent databases, focusing on key themes such as the impact of these technologies on corporate governance, potential benefits, and associated challenges. We investigate the implications of these technologies on corporate governance, scrutinizing potential benefits and associated challenges. Our findings reveal that blockchain, with its potential to enhance transparency and reduce information asymmetry, promises to transform accounting and auditing practices. Nevertheless, the successful integration of blockchain into mainstream financial systems necessitates addressing technical and regulatory challenges. AI's potential to augment decision-making capabilities offers opportunities for improved auditing efficiency, yet raises ethical concerns and implementation complexities. Lastly, Big Data presents opportunities for driving sustainable innovation and informed decision-making, while posing significant challenges concerning data privacy and security. This study's findings carry implications for practitioners, policy-makers, and academics alike, providing critical insights into the dynamic interplay between disruptive technologies and corporate governance. Future research may extend this work through empirical studies and comparative analyses across industries and regions.

The effect of political connection on corporate tax avoidance: The moderating role of accounting information quality

This study examines the relationship between the political connection and tax avoidance in all Jordanian market companies, the relationship between accounting information quality and tax avoidance, and the moderating effect of accounting information quality between the political connection and tax avoidance relationship. The sample data of the study includes 206 companies, with a total of 2266 observations from the period from 2008 to 2018. The results indicated that the political connection positively correlates with tax avoidance, which is supported (Jensen & Meckling, 1976). The results of this study also indicated a significant negative association between accounting information quality and tax avoidance. Moreover, the moderating effect of accounting information quality on the political connection and tax avoidance relationship indicated a significant negative association with tax avoidance. Thus, the study supported the agency theory that governance mechanisms such as accounting information quality function led to the reduction of agency problems and reduce information asymmetry. The study finding supported Ward et al.’s (2009) argument and suggested that accounting information quality plays a substitute role rather than a complementary role in mitigating the agency problem. The outcomes of this study could assist the policymaker and companies in the importance of accounting information quality in disciplining political involvement in the Jordanian market.

Анализ структуры рынка сельскохозяйственного машиностроения в контексте политики поддержки АПК

One of the factors in the growth of productivity in the agricultural sector is the development of agricultural engineering. The need for import substitution and the introduction of new technologies indicate the need to change industrial policies in the field of agricultural engineering. One of the factors for increasing the effectiveness of industrial policy is the use of sectoral structural analysis. The authors refined the system of indicators for assessing the industry market based on the analysis of dynamic indicators. To conduct an empirical study, a sample of agricultural engineering enterprises for 2000-2020 was formed. Industry analysis was carried out on the basis of coefficient and statistical analysis. The scientific novelty of the study lies in the substantiation of the model of the relationship between sectoral competitive analysis and industrial policy measures. The proposed theoretical model shows that the system of industrial policy measures and their effectiveness directly depend on the market structure. Based on a consistent analysis of the relationship between industrial policy and the structural analysis of the industry, the stages of sectoral structural analysis were formulated and a model for the formation of industrial policy in the industry market was proposed. It is shown that a «buyer’s market» has formed in the industry, while the industry is investment unattractive. Directions for adjusting industrial policy in the field of agricultural engineering were determined: reducing information asymmetry and stimulating demand for agricultural machinery. The proposed model for the formation of the state industrial policy is not exhaustive but can be considered as complementing the already established model of supporting domestic agricultural engineering.

Value Capturing from Tokenized Asset Histories

Digital tokens have sparked the interest of many businesses as they enable them to attribute value to digital objects and create novel ways for handling these. In the context of the used car trade, creating a unique representation of a car’s history (i.e., a tokenized car history) can help reduce information asymmetry and offer potential for businesses aiming to monetize their so far unutilized data resources. Having reached sufficient maturity, businesses developing tokenized asset histories are more and more questioning how they will best capture these newly created values. Applying design science research methods, we (1) propose two designs for offering and pricing tokenized asset histories and (2) evaluate their business implications for its providers through an experimental market game with 102 participants. The results indicate that users can be granted control over the offering and pricing tokenized asset histories without sacrificing its value but significantly increasing its trade and revenue.

The impact of board gender diversity in reducing abnormal accruals

The purpose of this study is to examine whether board gender diversity reduces abnormal accruals. This study provides evidence from 2016 to 2020 of listed firms in developing Sub-Saharan African countries. Panel data analysis is carried out on the relationship between abnormal accruals and board gender diversity. Board gender diversity is composed of the proportion of female executive directors, female non-executive directors and total female directors. The findings show that abnormal accruals reduce in the presence of females on the board especially non-executive female directors. This supports the notion that female directors specifically the non-executive directors on the board exercise their independence through accounting conservatism, improved board governance and monitoring. This reduces information asymmetry which in turn curbs earnings manipulation in firms leading to improved quality of earnings. This study contributes to board gender diversity as a major factor in the improvement of financial reporting quality in developing capital markets. Eventually, this will have strong implications on policy, regulation and academia.

Corporate governance and cost of equity: An empirical investigation of the United Arab Emirates stock market

The set of rules, laws, and procedures that lead and regulate a firm is known as corporate governance (Alqaraleh et al., 2022). The primary objective of this study was to investigate the effect of the corporate governance index on the cost of equity for businesses listed on the United Arab Emirates (UAE) Stock Exchange. This study gathers data from yearly reports from 2015 to 2021 in order to test hypotheses using multiple linear regression models to analyze the gathered data. The independent variable of the corporate governance index in our research consists of eight distinct corporate governance characteristics. According to the findings of our investigation, there is a negative correlation between corporate governance and equity capital cost. This indicates that the quality of corporate governance may lower the cost of capital. In order to improve the quality of financial reporting, we advocate implementing a robust corporate governance framework and reducing information asymmetry, i.e., increasing transparency and agency conflict, therefore, attracting financial investors and suppliers, enhancing the capital market, and absorbing the organization’s required financial resources at a reduced rate. The study results suggest that corporations might minimize the cost of equity by creating excellent corporate governance. In the cost of equality, the result of the study emphasizes the significance and efficacy of corporate governance.

Economia de custos de transação e indicações geográficas: uma análise sistemática da literatura

Abstract: Transaction Cost Economics (TCE) is one of the most applied economic theories to studies of agrifood chains, especially for presenting approaches that analyze the role of institutions in the relationship between organizations, making it completely adherent to the concept of Coordination, vital in chain management. Agro-industrial chains have continuously experienced mechanisms to reduce information asymmetry between producer and final consumer, one of these mechanisms being Geographical Indications (GIs), certifications of origin based on geographic location. This work aims to identify the state-of-the-art of TCE in studies related to GIs, identifying how the topics related to theory are approached and whether or not there are literature gaps in this regard. A systematic literature review was made in two substantial scientific databases using Methodi Ordinatio. The results demonstrate a certain homogeneity of studies, which focuses on Coordination and Governance, as well as a low synergy between the themes. Future studies could enrich the academic literature by contemplating an opposite path to this homogeneousness, either by a) exploring how TCE can explain the development of GIs; b) investigating the opportunism between producers and association members; or c) studying the limited rationality of the links downstream the chain.

Corporate governance in Chinese manufacturing sector: Ownership structure, monitoring and firms' earning quality

<abstract> <p>In this study, we explore the impact of ownership structure on a firm's earnings quality in emerging markets. Using the Chinese manufacturing industry sample set, we demonstrate that higher profitability performance could increase earnings quality. Higher concentrated shareholding and institutional shareholding reduce information asymmetry and improve external monitoring, improving earnings quality. Well-studied independent board members do not improve but contribute negatively to earnings quality. Such a result may be due to the lack of variation in the number of independent board members in each list of firms. Almost all firms choose to have three independent board members. Finally, bond debt increases asset size and agency costs; the impact of bond debt on earnings quality is negative. When considering the interaction between bond covenants and external monitoring, including independent board members and institutional shareholdings, the interactive effects reduce the negative effect of the bond debt on earnings quality. This study contributes to discovering that both direct and indirect monitoring of ownership structure contributes to the firm's management and provides some useful insight to reduce agency costs.</p> </abstract>

Digital currency as a tool for reducing information asymmetry: Start-ups' financing example

Support for technology startups is a strategically important issue of economic development. One of the most relevant areas is a fintech startup. In this regard, it is interesting to consider the possibilities of new digital tools in the context of startup financing processes. The paper considers the problem of low efficiency of investing in startups, and makes an assumption about the possibilities of reducing the existing inefficiency of venture investments associated with information asymmetry through the usage of digital currency and digital platform.

Combining Big Data Analysis to Study the Relationship between the Tone of CSR Reports and Information Asymmetry

Big data mining and analytics help uncover hidden patterns and correlations in business. It serves as the optimal tool to interpret the behavior of companies in specific environments. Built on the large amount of data obtained from various sources, this paper examines the relationship between the tone of corporate social responsibility(CSR) reports and the degree of information asymmetry between investors and managers. Python software is used for data collection, text analysis, and word frequency statistics. The results show that the tone of the social responsibility report reduces the degree of information asymmetry, indicating that the tone of the social responsibility report has an incremental information effect. Further analysis shows that the tone of CSR reports significantly reduces information asymmetry in companies with optimistic forecasts and high media attention.

Common institutional investors and the quality of management earnings forecasts-Empirical and machine learning evidences.

Based on the data of the Chinese A-share listed firms in China Shanghai and Shenzhen Stock Exchange from 2014 to 2021, this article explores the relationship between common institutional investors and the quality of management earnings forecasts. The study used the multiple linear regression model and empirically found that common institutional investors positively impact the precision of earnings forecasts. This article also uses graph neural networks to predict the precision of earnings forecasts. Our findings have shown that common institutional investors form external supervision over restricting management to release a wide width of earnings forecasts, which helps to improve the risk warning function of earnings forecasts and promote the sustainable development of information disclosure from management in the Chinese capital market. One of the marginal contributions of this paper is that it enriches the literature related to the economic consequences of common institutional shareholding. Then, the neural network method used to predict the quality of management forecasts enhances the research method of institutional investors and the behavior of management earnings forecasts. Thirdly, this paper calls for strengthening information sharing and circulation among institutional investors to reduce information asymmetry between investors and management.

Auditing quality between share price and liquidity regarding investor’s decision

Financial statements and the fact that many investors depend on the most critical outputs of the auditing quality. We documented the impact of audit quality as measured by audit firm size, tenure, fees, and firm experience on the stock prices and the liquidity of stock companies listed on the Amman Stock Exchange (ASE). The research adopted the deductive approach considering the least squares dummy variable approach following Pham et al. (2020), Sumiadji et al. (2019), Ugwunta et al. (2018), and Al-Thuneibat et al. (2011) to study the relationship between time-varying predictors and outcomes of 185 shareholding companies listed on ASE from 2016 to 2020. The characteristics of an audit firm vary in their effects on both the stock price and the liquidity. Management of the listed companies should be discussed to address the barriers that limit the impact of audit quality on the reliability of information associated with financial statements aiming to reduce information asymmetry and boost investor confidence, and then the share price should rise, and smaller audit firms should be encouraged to perform more specific audit assignments.

Corporate Governance and Information Asymmetry

The financial industry is regarded as the backbone of the economy, and good corporate governance is critical to its smooth operation. Keeping in view the importance of corporate governance, this study aims to empirically investigate the impact of corporate governance on information asymmetry with moderating role of institutional quality of Islamic and conventional financial institutions. We used unbalanced panel data from 2006 to 2017 of 49 financial institutions including commercial banks, insurance companies, and Modaraba companies. A two-step system-Generalize Method of Moments (GMM) estimator is used to mitigate the endogeneity problem. Corporate governance of Conventional Financial Institutions (CFIs) is significantly related to information asymmetry however, the board size, and board composition of Islamic Financial Institutions (IFIs) are insignificant with asymmetric information index (AII). Further, the size of the shari’ah board is negatively and significantly related to AII. Institutional Quality (IQ) is significantly contributed toward the reduction of information asymmetry and plays a role as a moderator. Further, the impact of corporate governance on IFIs and CFIs differs due to the nature and contractual relationship of the parties and the institution’s type. The results of the study reveal that good quality institutions are important for corporate governance structure and the reduction of information asymmetry in financial institutions.

Impact of Integrated Reporting on Information Asymmetry: Evidence from Sri Lanka

Considering the dearth of empirical evidence on the impact of integrated reporting (IR) on information asymmetry in developing countries, this paper investigates the impact of IR on information asymmetry in Sri Lanka. A paired sample t-test and a panel regression analysis are employed to draw empirical evidence. Information asymmetry is proxied by earnings forecast error, earnings forecast dispersion, and cost of equity capital, whereas firms' IR level is measured using the IR framework. Findings indicate a significant reduction in information asymmetry upon adopting IR. Further, they reveal that the level of IR has a feeble but statistically significant negative impact on the cost of equity capital. Earnings forecast error and forecast dispersion do not indicate significant associations with IR levels. Given the substantial cross-country differences, this paper offers a better understanding of the impact of IR on information asymmetry from a developing country setting where the adoption of IR is voluntary.

The impact of share repurchases on equity finance and performance

Although both share repurchases and equity issuance can help to reduce information asymmetry, only a few prior studies discuss how the information content of share repurchases affects firms’ subsequent decision in terms of equity issuance. We find that share repurchases are negatively related to subsequent equity issuance, which is consistent with the notion that undervalued firms are less likely to issue equity, while firms issuing equity are overvalued. We also examine whether this association differs according to the likely sources of the repurchase funds. We find that the association is more negative for firms that have high sales growth and, therefore, generate more internal cash flow. By contrast, we find that the association is less negative for firms that increase their debt financing. In addition, we document more positive operating and stock market performance on the part of firms that repurchase shares, especially firms that repurchase and then issue equity.

Accounting Information Quality, Tax Avoidance and Companies' Performance: the Moderate Role of Political Connection

Purpose: This study examines the relationship between the accounting information quality, tax avoidance, and political connection in all Jordanian companies listed on Amman Stock Exchange. The current study also investigates the moderating effect of political connections on accounting information quality and company performance relationships. Further, the study examines the moderating effect of political connection on tax avoidance and company performance relationship. Theoretical framework: Political connections, tax avoidance, and the quality of accounting information affect a company's performance. According to the agency theory, reliable accounting information improves business performance and resources’ allocation efficiency by reducing information asymmetry. Additionally, the adverse effects of politics on companies are mitigated by accounting information quality. As a result, the cash flow is allocated effectively, improving the business's overall performance. Design/methodology/approach: The study uses the ordinary least squares (OLS) and applied moderated multiple regression (MMR). The sample data of this study includes 2266 company-years observations over the period 2008-2018 for all Jordanian companies listed on Amman Stock Exchange. The study compares accounting and market-based measurements of companies' performance (ROE, Tobin's Q). Findings: The study reveals consistent results among the measure. The results support the agency theory and found that accounting information quality reduces information asymmetry and positively affects companies' performance. Also, tax avoidance helps the companies to have more cash, and the results indicate a significant positive effect on companies' performance. In addition, the results support the agency theory argument and found that politics increase agency costs and negatively affect companies' performance. However, further analysis found that political connections sustain the positive effect of accounting information quality, which is a robust governance mechanism in Jordanian listed companies. Finally, the results found that tax avoidance with more political connections harms companies' performance. Research, Practical & Social implications: This study helps policymakers increase the governance mechanisms function in Jordanian listed companies. Also, the higher political relationship with the companies could be affected negatively on the Jordanian companies' achievement. Originality/value: The findings suggest several consequences for the fields of accounting and corporate governance. Additionally, the Middle East nations, including the Jordanian market, have had numerous economic difficulties that this study aids in resolving. For example, antagonistic political ties, information asymmetry, and insufficient allocation of financial resources.

High-speed rail construction and labor investment efficiency: Evidence from an emerging market

This study investigates the association between high-speed rail (HSR) construction and labor investment efficiency. Using unique hand-collected data on HSR construction over the period 2008–2019, we find that HSR construction can significantly decrease inefficient labor investment in China. In addition, we find that this negative relationship is (a) strong in state-owned companies and in firms located in big cities and (b) weak in financially constrained firms and in firms located in areas with a strong religious atmosphere. Consistent with the theoretical prediction, we find that the HSR construction mitigates inefficient labor investment by reducing information asymmetry between managers and investors and enhancing labor mobility. Overall, our findings are robust to alternative measurements, additional controls, fixed effects, and endogeneity concerns. Our findings have implications for firms’ top management to make strategic decisions and for government’s bodies/policymakers in relevance to HSR investment decisions.

How does establishing a branch office affect audit quality? Evidence from China

Establishing a branch office may improve audit quality for an audit firm’s existing clients in the same region as the newly established branch by relieving time and financial resource constraints (i.e., the input channel) and reducing information asymmetry between auditors and clients (i.e., the information channel). Conversely, it may reduce audit quality by undermining audit independence (i.e., the audit independence channel). We test these conjectures using data on Chinese listed firms from 2001 to 2019 and the propensity score matching–difference-in-differences method. Our results show that establishing a branch office improves audit quality, and they remain robust to a series of alternative measures for audit quality. Further analyses indicate that the positive effect of establishing a branch office on audit quality is primarily achieved through the information channel. In addition, we find a knowledge transfer effect from the newly established branch to non-local branches within an audit firm. Moreover, establishing a branch office can benefit both auditors and clients because it leads to the provision of higher quality audit services in less time without audit fee increases compared with the situation without the branch office. Our study contributes to the related literature and is of interest to regulators and practitioners.

Bank-Firm Relationship and Corporate Green Innovation: Evidence from China

This paper analyzes the correlation between bank-firm relationship and corporate green innovation in heavy pollution industries in China. It is found that bank-firm relationship has positively effect on corporate green innovation. The result is robust to Heckman two-stage analysis and Placebo test. Mechanism analysis shows that bank-firm relationship can reduce information asymmetry between borrower and lender, and foster corporate to obtain more debt financing and advance environmental governance. Moreover, the effect of bank-firm relationship on green innovation is more pronounced for corporate located in the area with poor green finance and low environmental regulatory information. Our findings suggest that bank-firm relationship can promote corporate green innovation and contribute to the development of green finance.

Public-Private-Community Partnerships (PPCPs) as a mechanism in enhancing food security during the COVID-19 pandemic in Zimbabwe

PurposeThis paper examines the relevance of Public-Private-Community Partnerships (PPCPs) as an alternative mechanism in enhancing food security during the COVID-19 pandemic and beyond in Zimbabwe. It also draws attention to the complexities of adopting PPCPs, and proposes possible options to improve their effectiveness.Design/methodology/approachThe study applied concurrent mixed research methods. The sample population comprised multiple stakeholders in the area of food security and agricultural financing in Zimbabwe. The research adopted purposive and snowball sampling techniques. Data were collected through questionnaire, in-depth interviews, focus group discussions (FGDs) and documentary analysis. Descriptive statistics were used to analyse quantitative data, while qualitative data analysis was conducted thematically.FindingsPrior to the outbreak of the COVID-19 pandemic, food insecurity was a consistent challenge in Zimbabwe. The pandemic has worsened the situation by further disruption of food systems and limiting people's access to food. PPCPs could be feasible alternative as they enhance value chain collaboration, improve access to inputs, reduce information asymmetry, ensure trust and facilitate risk sharing. PPCPs require proper design, control of transaction costs, clear definition of partners' roles, fair risk sharing, trust, and flexibility.Originality/valuePPCPs are yet to be adopted in the Zimbabwean agricultural sector. The research informs policymakers on the need to implement multi-stakeholder collaborations in food production.