Governance Quality and Information Asymmetry

Financial Markets, Institutions and Instruments, 24, 2015, pp 127-157

38 Pages Posted: 2 Jan 2014 Last revised: 15 Apr 2015

Multiple version iconThere are 2 versions of this paper

Date Written: April 14, 2015

Abstract

We examine the effect of corporate governance mechanisms on asymmetric information. Using a sample of 392 non-financial UK companies listed in the London Stock Exchange we find that board independence, performance related executive compensation, the number of insiders and leverage are significantly negatively related to asymmetric information whereas the percentage of insider ownership and block ownership are significantly positively related to asymmetric information. The results suggest that UK companies have a high degree of compliance with the combined code on corporate governance and as a result mitigate asymmetric information while contributing towards resolving agency problems.

Keywords: Corporate Governance Mechanisms, Asymmetric Information, Agency Theory

Suggested Citation

Abdellatif, Ahmed Elbadry and Gounopoulos, Dimitrios and Skinner, Frank S., Governance Quality and Information Asymmetry (April 14, 2015). Financial Markets, Institutions and Instruments, 24, 2015, pp 127-157 , Available at SSRN: https://ssrn.com/abstract=2373902 or http://dx.doi.org/10.2139/ssrn.2373902

Ahmed Elbadry Abdellatif (Contact Author)

Cairo University ( email )

Al Orman
Giza, Cairo 11435
Egypt

Dimitrios Gounopoulos

University of Bath ( email )

School of Management,
Wessex House, Claverton Down
Bath, BA2 7AY
United Kingdom

Frank S. Skinner

Brunel University ( email )

Kingston Lane
Uxbridge, Middlesex UB8 3PH
United Kingdom

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