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
Citation
GOH, Beng Wee; LEE, Jimmy; NG, Jeffrey; and OW YONG, Kevin.
The Effect of Board Independence on Information Asymmetry. (2016). European Accounting Review. 25, (1), 155-182. Research Collection School Of Accountancy.
Available at: https://ink.library.smu.edu.sg/soa_research/1435
Copyright Owner and License
Authors
Creative Commons 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