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Determining the Relationship between the Quality of Voluntary and Compulsory Disclosure and Information Asymmetry

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  • Mehrdad Ghanbari
  • Seyyed Yahya Asadollahi
  • Fatemeh Taheri

Abstract

Due to the necessity of reducing information asymmetry and following the principle of disclosure by companies, the present study investigated the relationship between disclosure quality (voluntary and compulsory disclosure) and information asymmetry. Therefore, by considering particular criteria and conditions, 101 companies were selected between 2010 and 2014 as the target sample by systematic deletion from all listed companies in Tehran Stock Exchange. Information related to variables was collected and analyzing the relationship between variables was carried out using multiple regression and based on panel data method. This study includes two hypotheses. These two hypotheses tried to investigate the effect of voluntary and compulsory disclosure on information asymmetry in these companies. Variables in this study include information asymmetry as dependent variable, disclosure quality as independent variable, and company size, profit prediction, financial leverage and ownership structure as control variables. The obtained results from testing the hypotheses revealed that voluntary disclosure results in reduction of information asymmetry but no relationship found between compulsory disclosure and information asymmetry.

Suggested Citation

  • Mehrdad Ghanbari & Seyyed Yahya Asadollahi & Fatemeh Taheri, 2016. "Determining the Relationship between the Quality of Voluntary and Compulsory Disclosure and Information Asymmetry," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(1), pages 154-163, January.
    • Handle: RePEc:hur:ijarbs:v:6:y:2016:i:1:p:154-163
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    References listed on IDEAS

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    1. Ball, Ray & Shivakumar, Lakshmanan, 2005. "Earnings quality in UK private firms: comparative loss recognition timeliness," Journal of Accounting and Economics, Elsevier, vol. 39(1), pages 83-128, February.
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