Information Asymmetry, Disclosure and Foreign Institutional Investment: An Empirical Investigation of the Impact of the Sarbanes-Oxley Act

Information asymmetry, disclosure and foreign institutional investment: An empirical investigation of the impact of the Sarbanes-Oxley Act

International Business Review ◽

10.1016/j.ibusrev.2015.04.001 ◽

2015 ◽

Vol 24 (5) ◽

pp. 902-915 ◽

Cited By ~ 6

Author(s):

Nida Abdioglu ◽

Vassiliki Bamiatzi ◽

S.Tamer Cavusgil ◽

Arif Khurshed ◽

Konstantinos Stathopoulos

Keyword(s):

Information Asymmetry ◽

Empirical Investigation ◽

Institutional Investment ◽

Sarbanes Oxley ◽

The Impact

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Do Companies With Effective Internal Controls Over Financial Reporting Benefit From Sarbanes–Oxley Sections 302 and 404?

Journal of Accounting Auditing & Finance ◽

10.1177/0148558x16663091 ◽

2016 ◽

Vol 33 (2) ◽

pp. 200-227 ◽

Cited By ~ 4

Author(s):

Parveen P. Gupta ◽

Heibatollah Sami ◽

Haiyan Zhou

Keyword(s):

Information Asymmetry ◽

Financial Reporting ◽

Capital Markets ◽

Internal Control ◽

Trading Volume ◽

Price Volatility ◽

Sarbanes Oxley ◽

Section 302 ◽

The Impact ◽

Bid Ask Spreads

Post-SOX (Sarbanes–Oxley Act) academic research on internal control focuses on the characteristics of publicly listed companies disclosing material control weaknesses or the consequences experienced by these companies. However, to date, limited research has empirically examined whether these new disclosures truly enhance “public interest” by promoting “equity” in the capital markets through enhanced information distribution. In this article, we empirically investigate the impact these disclosures have on information asymmetry and related market micro-structure. We hypothesize that both the management’s and the auditor’s reporting on internal control provide outside investors additional and higher quality information about a firm’s future prospects, thereby reducing the information asymmetry in capital markets. Such reduction in information asymmetry should be reflected in decreased bid-ask spreads and price volatility, as well as increased trading volume. Our cross-sectional analyses show that, subsequent to the management’s report on internal control per Section 302, the information environment improves for U.S. firms as manifested by decreased bid-ask spread and price volatility, and increased trading volume. However, we find no similar results subsequent to the auditors’ reporting on a company’s internal control over financial reporting. In our time-series intervention analyses, about 70% of sample firms have experienced significant and permanent reductions in their bid-ask spreads subsequent to the implementation of Section 302 of SOX, in contrast to only 30% of firms subsequent to the implementation of Section 404 of SOX. Our findings point to the public policy issue of whether financial reporting quality of public companies can be improved at a lower cost.

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Information Asymmetry and Corporate Governance

Quarterly Journal of Finance ◽

10.1142/s2010139215500147 ◽

2015 ◽

Vol 05 (03) ◽

pp. 1550014 ◽

Cited By ~ 20

Author(s):

Jie Cai ◽

Yixin Liu ◽

Yiming Qian ◽

Miaomiao Yu

Keyword(s):

Corporate Governance ◽

Asymmetric Information ◽

Information Asymmetry ◽

Pay For Performance ◽

Market Discipline ◽

Monitoring Cost ◽

Sarbanes Oxley ◽

Ceo Pay ◽

Board Monitoring ◽

The Impact

We examine the impact of a firm’s asymmetric information on its choice of three mechanisms of corporate governance: The intensity of board monitoring, the exposure to market discipline, and CEO pay-for-performance sensitivity. We find that firms facing greater asymmetric information tend to use less intensive board monitoring but rely more on market discipline and CEO incentive alignment. These results are consistent with the monitoring cost hypothesis. In addition, we find that high information-asymmetry firms that have to substantially increase board monitoring intensity after the Sarbanes–Oxley Act suffer poor stock performance. Our evidence therefore suggests that regulators should use caution when imposing uniform corporate governance requirements on all firms.

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An empirical investigation on the impact of XBRL adoption on information asymmetry: Evidence from Europe

Decision Support Systems ◽

10.1016/j.dss.2016.09.004 ◽

2017 ◽

Vol 93 ◽

pp. 42-50 ◽

Cited By ~ 12

Author(s):

Chunhui Liu ◽

Xin (Robert) Luo ◽

Fu Lee Wang

Keyword(s):

Information Asymmetry ◽

Empirical Investigation ◽

The Impact

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The Effect of Taxation and Corruption on Firm Growth: An Empirical Investigation for Vietnam

Journal of Economics and Development ◽

10.33301/2016.18.03.01 ◽

2016 ◽

pp. 5-29

Author(s):

Bich Le Thi Ngoc

Keyword(s):

International Development ◽

Firm Growth ◽

Empirical Investigation ◽

Manufacturing Firms ◽

Economic Management ◽

Tax Rate ◽

Percentage Point Increase ◽

Percentage Points ◽

Point Increase ◽

The Impact

The aim of this study is to analyze empirically the impact of taxation and corruption on the growth of manufacturing firms in Vietnam. The study employed pooled OLS estimation and then instrument variables with fixed effect for the panel data of 1377 firms in Vietnam from 2005 to 2011. These data were obtained from the survey of the Central Institute for Economic Management and the Danish International Development Agency. The results show that both taxation and corruption are negatively associated with firm growth measured by firm sales adjusted according to the GDP deflator. A one-percentage point increase in the bribery rate is linked with a reduction of 16,883 percentage points in firm revenue, over four and a half times bigger than the effect of a one-percentage point increase in the tax rate. From the findings of this research, the author recommends the Vietnam government to lessen taxation on firms and that there should be an urgent revolution in anti-corruption policies as well as bureaucratic improvement in Vietnam.

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