The impact of corporate governance on information asymmetry in Slovakia

Abstract

The consequences of poor management in companies are expressed fully and affect not only the companies themselves, but the entire world economy. Especially for multinationals we note one important factor which significantly influences their governance, namely the separation of ownership from management. The negative consequences of this separation force companies to greater transparency and responsible management through application of the principles of corporate governance. Applying the principles of corporate governance has a positive effect on the elimination of information asymmetry, and hence on the financial management of the companies. Our main objective of the paper is to analyze the corporate governance principle´s application in companies and to examine the possible impact of corporate governance on the estimated level of information asymmetry in the financial decision-making processes. We measured the level of corporate governance in selected companies in Slovakia (quoted on the Bratislava Stock Exchange) and used correlation analysis to examine the relationship between corporate governance and the level of information asymmetry.   Keywords: socially responsible business; corporate governance; corporate governance index; information asymmetry; Bratislava Stock Exchange

Corporate Governance and Information Asymmetry

“…Wu et al, (2019) determine a negative relationship between independent directors and information asymmetry in USA firms. Musovaa et al, (2017) concluded that CG has a positive impact on reducing information asymmetry. Mali and Anis (2017) found that CG has a positive impact on information transparency in Tunisian institutions.…”

“…Existing literature focused on listed institutions to investigate the relationship of CG with information asymmetry however, not listed institutions are ignored largely. Few studies are, Wu et al (2019) on US institutions, Joudi et al (2019) on Iranian firms, and Tahir et al (2019) on Pakistani listed firms, the relationship between CG and disclosure quality of listed Pakistani institutions investigated by Nosheen and Sajjad (2018), Musovaa (2017) on listed firms of Bratislava Stock Exchange. Arslan and Alqatan (2020) and Arslan et al (2019) concluded that institutional determinants like legal, political, corruption, culture and values are very important to determine the practices of CG in developed and developing countries.…”