Publication Type

Journal Article

Version

Preprint

Publication Date

1-2016

Abstract

Boards have an important role in ensuring that investors’ interests are protected. Our paper first examines whether the independence of a firm's board affects information asymmetry among investors. We provide evidence that greater board independence leads to lower information asymmetry. Next, we provide evidence that more voluntary disclosure and greater analyst coverage are two underlying mechanisms via which greater board independence reduces information asymmetry. Of the two mechanisms, we find that analyst coverage is more significant in influencing how board independence affects information asymmetry. Overall, our paper contributes to a better understanding of the effect of board independence on information asymmetry.

Keywords

Corporate governance, board independence, management forecasts, analysts, information asymmetry

Discipline

Accounting | Corporate Finance

Research Areas

Corporate Governance, Auditing and Risk Management

Publication

European Accounting Review

Volume

25

Issue

1

First Page

155

Last Page

182

ISSN

0963-8180

Identifier

10.1080/09638180.2014.990477

Publisher

Taylor & Francis (Routledge): SSH Titles

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://dx.doi.org/10.1080/09638180.2014.990477

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