Corporate Governance Mechanisms and Asymmetric Information

Ahmed Elbadry, Dimitrios Gounopoulos, Frank Skinner

Research output: Contribution to journalArticlepeer-review

17 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)127-157
JournalFinancial Markets, Insitutions and Instruments
Volume24
Issue number2-3
DOIs
Publication statusPublished - 1 May 2015

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