Governance Quality and Information Asymmetry

31 Pages Posted: 7 Apr 2015

Multiple version iconThere are 2 versions of this paper

Date Written: May/August 2015

Abstract

This paper explores the relation between corporate governance and asymmetric information. We find that proxies for governance mechanisms that encourage the monitoring of managers are inversely related to proxies for asymmetric information. Specifically, greater board independence, board activeness and debt financing are significantly and inversely related to the degree of asymmetric information as reflected in bid‐ask spreads, volatility of share returns, normalised share trade volumes and market value of shares traded. This implies that corporate governance mechanisms that enhance managerial monitoring lead to improvements in the informational environment of the firm.

Keywords: Corporate Governance Mechanisms, Asymmetric Information, Agency Theory

JEL Classification: G34, D82, G30, G32

Suggested Citation

Abdellatif, Ahmed Elbadry and Gounopoulos, Dimitrios and Skinner, Frank S., Governance Quality and Information Asymmetry (May/August 2015). Financial Markets, Institutions & Instruments, Vol. 24, Issue 2-3, pp. 127-157, 2015, Available at SSRN: https://ssrn.com/abstract=2591150 or http://dx.doi.org/10.1111/fmii.12026

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

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
1,045
PlumX Metrics