IDEAS home Printed from https://ideas.repec.org/a/sae/vikjou/v41y2016i1p51-60.html
   My bibliography  Save this article

A Study of Impact of Ownership Structure and Disclosure Quality on Information Asymmetry in Iran

Author

Listed:
  • Mahmoud Mousavi Shiri
  • Mahdi Salehi
  • Ali Radbon

Abstract

Executive Summary Capital market uses financial information with high disclosure quality, and this information can influence capital market decision-making. Corporate governance research shows that ownership structure can influence financial reporting quality, and thus play an effective role in capital market decision-making. The main purpose of the current study is to examine the impact of ownership structure and disclosure quality on the information asymmetry phenomenon among the listed companies on the Tehran Stock Exchange (TSE). Ownership structure (including ownership concentration and institutional ownership) and disclosure quality (including reliability and timeliness) are considered as independent variables, and their impact is examined on the dependent variable (information asymmetry). Consistent with extant literature, bid-ask spread is used as a proxy variable for information asymmetry. The statistical results, based on data collected from 102 listed companies on the TSE during 2007–2014, revealed positive impact of ownership structure and negative impact of disclosure quality on information asymmetry. These results show that information asymmetry is less in firms that published more reliable and timely information, and is more in firms with more concentrated ownership structure, higher institutional ownership, and lower disclosure quality. In other words, reliability and timeliness of information have a positive role in stock price identification and close-up views of the buyer and seller in TSE. Findings of this article can assist accounting researchers and theoreticians in comparing real world facts with hypotheses developed with respect to ownership structure, disclosure quality, and information asymmetry. By increasing transparency in the capital markets, market participants, decision-makers, financial analysts, and potential investors are aided in their analysis of plans for investments in financial assets.

Suggested Citation

  • Mahmoud Mousavi Shiri & Mahdi Salehi & Ali Radbon, 2016. "A Study of Impact of Ownership Structure and Disclosure Quality on Information Asymmetry in Iran," Vikalpa: The Journal for Decision Makers, , vol. 41(1), pages 51-60, March.
    • Handle: RePEc:sae:vikjou:v:41:y:2016:i:1:p:51-60
    DOI: 10.1177/0256090915620876
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0256090915620876
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0256090915620876?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Sabri Boubaker & Amal Hamrouni & Qi-Bin Liang, 2015. "Corporate Governance, Voluntary Disclosure, and Firm Information Environment," Post-Print hal-01158105, HAL.
    2. Beyer, Anne & Cohen, Daniel A. & Lys, Thomas Z. & Walther, Beverly R., 2010. "The financial reporting environment: Review of the recent literature," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 296-343, December.
    3. Jiang, Haiyan & Habib, Ahsan & Hu, Baiding, 2011. "Ownership concentration, voluntary disclosures and information asymmetry in New Zealand," The British Accounting Review, Elsevier, vol. 43(1), pages 39-53.
    4. Demiralp, Ilhan & D'Mello, Ranjan & Schlingemann, Frederik P. & Subramaniam, Venkat, 2011. "Are there monitoring benefits to institutional ownership? Evidence from seasoned equity offerings," Journal of Corporate Finance, Elsevier, vol. 17(5), pages 1340-1359.
    5. Healy, Paul M. & Palepu, Krishna G., 2001. "Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 405-440, September.
    6. Wendy Beekes & Philip Brown, 2006. "Do Better‐Governed Australian Firms Make More Informative Disclosures?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(3‐4), pages 422-450, April.
    7. Wendy Beekes & Philip Brown, 2006. "Do Better-Governed Australian Firms Make More Informative Disclosures?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(3-4), pages 422-450.
    8. Mark H. Lang & Russell J. Lundholm, 2000. "Voluntary Disclosure and Equity Offerings: Reducing Information Asymmetry or Hyping the Stock?," Contemporary Accounting Research, John Wiley & Sons, vol. 17(4), pages 623-662, December.
    9. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yousef Alwardat, 2019. "Disclosure Quality and its Impact on Financial Reporting Quality, Audit Quality, and Investors’ Perceptions of the Quality of Financial Reporting: A Literature Review," Accounting and Finance Research, Sciedu Press, vol. 8(3), pages 201-201, August.
    2. Deaa Al-Deen Al-Sraheen, 0000. "The Relationship between Accounting Disclosure, Financial Reports and Stock Returns: The Moderated Role of Ownership Concentration," Proceedings of Economics and Finance Conferences 14716134, International Institute of Social and Economic Sciences.
    3. Alex Johanes Simamora, 2020. "ASEAN Corporate Governance Scorecard and Firm Value," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 10(3), pages 66-80.
    4. Awatif Hodaed Alsheikh & Warda Hodaed Alsheikh, 2023. "Does Audit Committee Busyness Impact Audit Report Lag?," IJFS, MDPI, vol. 11(1), pages 1-16, March.
    5. Hoang, Trang Cam & Pham, Huy & Ramiah, Vikash & Moosa, Imad & Le, Danh Vinh, 2020. "The effects of information disclosure regulation on stock markets: Evidence from Vietnam," Research in International Business and Finance, Elsevier, vol. 51(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fargher, Neil & Wee, Marvin, 2019. "The impact of Ball and Brown (1968) on generations of research," Pacific-Basin Finance Journal, Elsevier, vol. 54(C), pages 55-72.
    2. Ahmed, Ammad & Monem, Reza M. & Delaney, Deborah & Ng, Chew, 2017. "Gender diversity in corporate boards and continuous disclosure: Evidence from Australia," Journal of Contemporary Accounting and Economics, Elsevier, vol. 13(2), pages 89-107.
    3. Andy Lardon & Marc Deloof, 2014. "Financial disclosure by SMEs listed on a semi-regulated market: evidence from the Euronext Free Market," Small Business Economics, Springer, vol. 42(2), pages 361-385, February.
    4. Leonardo Fernandez, 2012. "Price Discovery, Investor Distraction and Analyst Recommendations Under Continuous Disclosure Requirements in Australia," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 1-2012, January-A.
    5. Luminita Enache & Khaled Hussainey, 2020. "The substitutive relation between voluntary disclosure and corporate governance in their effects on firm performance," Review of Quantitative Finance and Accounting, Springer, vol. 54(2), pages 413-445, February.
    6. Kanapathippillai, Sutharson & Johl, Shireenjit K. & Wines, Graeme, 2016. "Remuneration committee effectiveness and narrative remuneration disclosure," Pacific-Basin Finance Journal, Elsevier, vol. 40(PB), pages 384-402.
    7. Thorsten Knauer & Andreas Wömpener, 2011. "Management Forecast Regulation and Practice in Germany – Firm and Auditor Perspectives," Accounting in Europe, Taylor & Francis Journals, vol. 8(2), pages 185-209.
    8. Taylor, Grantley & Tower, Greg & Van Der Zahn, Mitch, 2011. "The influence of international taxation structures on corporate financial disclosure patterns," Accounting forum, Elsevier, vol. 35(1), pages 32-46.
    9. Katsuhiko Muramiya & Tomomi Takada, 2020. "How cross‐shareholding influences financial reporting: Evidence from Japan," Corporate Governance: An International Review, Wiley Blackwell, vol. 28(5), pages 309-326, September.
    10. Hichem Khlif & Kamran Ahmed & Mohsen Souissi, 2017. "Ownership structure and voluntary disclosure: A synthesis of empirical studies," Australian Journal of Management, Australian School of Business, vol. 42(3), pages 376-403, August.
    11. Araniyar C. Isukul & John J. Chizea, 2017. "Corporate Governance Disclosure in Developing Countries: A Comparative Analysis in Nigerian and South African Banks," SAGE Open, , vol. 7(3), pages 21582440177, July.
    12. Niamh M. Brennan & Jill Solomon, 2008. "Corporate governance, accountability and mechanisms of accountability: an overview," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 21(7), pages 885-906, September.
    13. Blankespoor, Elizabeth & deHaan, Ed & Marinovic, Iván, 2020. "Disclosure processing costs, investors’ information choice, and equity market outcomes: A review," Journal of Accounting and Economics, Elsevier, vol. 70(2).
    14. Lamia Chourou & Luo He & Ligang Zhong, 2020. "Does religiosity enhance the quality of management earnings forecasts?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 47(7-8), pages 910-948, July.
    15. Moumen, Néjia & Ben Othman, Hakim & Hussainey, Khaled, 2016. "Board structure and the informativeness of risk disclosure: Evidence from MENA emerging markets," Advances in accounting, Elsevier, vol. 35(C), pages 82-97.
    16. Al-Hadi, Ahmed & Al-Yahyaee, Khamis Hamed & Hussain, Syed Mujahid & Taylor, Grantley, 2019. "Market risk disclosures and corporate governance structure: Evidence from GCC financial firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 73(C), pages 136-150.
    17. Imhof, Michael J & Seavey, Scott E., 2018. "How investors value cash and cash flows when managers commit to providing earnings forecasts," Advances in accounting, Elsevier, vol. 41(C), pages 74-87.
    18. Reajmin Sultana, 2021. "Family ownership, information problem and firm performance," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(6), pages 73-82, September.
    19. Leonardo Fernandez, 2012. "Price Discovery, Investor Distraction and Analyst Recommendations Under Continuous Disclosure Requirements in Australia," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 3, July-Dece.
    20. Vera Lucia M. Cunha & M. Dinis Mendes, 2017. "Financial Determinants of Corporate Governance Disclosure: Portuguese Evidence," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 3(1), pages 21-36, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:vikjou:v:41:y:2016:i:1:p:51-60. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.