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Governance Quality and Information Asymmetry

Lookup NU author(s): Professor Dimitrios Gounopoulos

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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.

Publication metadata

Author(s): Abdelattif A, Gounopoulos D, Skinner F

Publication type: Article

Publication status: Published

Journal: Financial Markets, Institutions and Instrument

Year: 2015

Volume: 24

Issue: 2-3

Pages: 127-157

Print publication date: 01/05/2015

Online publication date: 06/04/2015

Acceptance date: 01/02/2015

Date deposited: 01/09/2016

ISSN (print): 0963-8008

ISSN (electronic): 1468-0416

Publisher: Wiley

URL: http://dx.doi.org/10.1111/fmii.12026

DOI: 10.1111/fmii.12026

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