Corporate governance and information asymmetry between managers and investors

Abstract

Purpose -The purpose of this paper is to investigate the impact of governance on information asymmetry between managers and investors. Hence, the paper seeks to extend prior voluntary disclosure research.Design/methodology/approach -The paper investigates how a firm's governance maps into the level of information asymmetry between managers and investors. Governance encompasses two complementary dimensions: formal monitoring attributes and voluntary disclosure about board processes. Information asymmetry is measured by either share price volatility or Tobin's Q.Findings -The results show that some formal monitoring attributes (board and audit committee size) as well as the extent of voluntary governance disclosure reduce information asymmetry. This suggests that governance disclosure may complement a firm's governance monitoring attributes, especially in a country such as Canada where investors have good legal protection. It appears also that firms take into account ultimate costs and benefits to shareholders when determining their governance disclosure.Originality/value -To the best of the authors' knowledge, this study is the first to investigate the impact of voluntary governance disclosure on information asymmetry.

The Impact of Corporate Characteristics on Social and Environmental Disclosure (CSED): The Case of Jordan

“…For instance, Hanafi (2006); Naser et al, (2006) and Williams (1999) used firm's market capitalization to measure the impact of firm's size on the level of CSED. Yao et al (2011), Cormier et al (2010) and Trotman and Bradley (1981) used total assets as company size. Whilst Belkaoui and Karpik (1989);Hossan, (2010) and Freedman and Jaggi (1988) used return on assets to measure the level of CSED.…”

Corporate Governance and Voluntary Disclosure of Interim Financial Reporting in Jordan

“…Laksmana (2008) also discovered a positive association between frequency of board meeting and the degree of voluntary disclosure in compensation practices. Nonetheless, whether the relationship between board meetings and voluntary corporate governance disclosure does indeed exist, is yet to be affirmed (Cormier et al, 2010).…”

Impact of board independence on the quality of community disclosures in annual reports

“…Board meeting frequency could be indicative of board diligence, and this could have a direct impact on monitoring effectiveness. Board meeting frequency is used in many previous studies (Cormier et al, 2010;Evans et al, 2002;Vafeas, 1999;Webb, 2004) as an important measure of board diligence and effectiveness. Following the argument that boards with outside directors tend to meet more frequently (Jensen, 1993;Vafeas, 1999) and are thus more effective in handling social issues, we control for board meeting frequency and anticipate a statistically positive relationship with CCID.…”