The Effects of Ownership Structures on Firm Information Asymmetry in Malaysia

Abstract

This paper presents the relationship between different types of blockholders with information asymmetry in Malaysian firms. To be more specific, this study divides the ownership structures into managerial blockholder, institutional blockholder and individual blockholder and ownership concentration while holding firm size and trading volume as control variables. On the other hand, the stock volatility and bid-ask spread are used as a proxy for information asymmetry. A sample of the top 150 largest public listed firms in term of market capitalisation is chosen from Bursa Malaysia from 2011 to 2015. Panel regression analysis is used to examine the data. The results show managerial blockholders, firm size and trading volume significantly influence information asymmetry. While institutional blockholders, individual blockholders and ownership concentration exhibit no relationship with information asymmetry. The study from this result can be useful for investors and the policymakers in Malaysia as it gives a clearer picture and more understandings on ownership structures and information asymmetry in the Malaysia market.

Growth Opportunities Utilization Inter-Industry

“…The independent variable as a proxy for our information asymmetry uses firm size and firm age. Smaller companies tend to have more prominent asymmetry (internal information) problems (Hwang et al, 2019). Furthermore, large-sized companies have more funding options than small-sized companies.…”

“…Large companies tend to have fewer information asymmetry problems, whereas small companies with high growth have a higher level of information asymmetry (Frank & Goyal, 2003;Tayem, 2018). Having better good governance and financial analysts and becoming public attention -causes larger companies to have lower information asymmetry levels (Hwang et al, 2019). In other words, older and larger companies have less asymmetric information, allowing them to obtain equity funding when a debt overhang occurs.…”

Debt versus Equity—Open Innovation to Reduce Asymmetric Information

“…When growth opportunities reach information asymmetry, the issuance of debt results in companies still being able to issue leverage greater than the total assets, even though market leverage depreciates. Growth opportunities are measured by (total sales t-total sales t 1)/total sales t−1 [46,47].…”