Journal article
Information Asymmetry and Corporate Governance
The quarterly journal of finance, v 5(3), p1550014
01 Sep 2015
Abstract
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.
Metrics
Details
- Title
- Information Asymmetry and Corporate Governance
- Creators
- Jie Cai - Drexel UniversityYixin Liu - University of New HampshireYiming Qian - University of IowaMiaomiao Yu - University of Saskatchewan
- Publication Details
- The quarterly journal of finance, v 5(3), p1550014
- Publisher
- World Scientific
- Number of pages
- 32
- Grant note
- Peter T. Paul Financial Policy Center
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:000216885900005
- Scopus ID
- 2-s2.0-84984994323
- Other Identifier
- 991019168396504721
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance