The Relation Between Information Asymmetry and Firm Value: Empirical Evidence from Vietnamese Listed Firms
Main Article Content
Abstract
Managers normally have an advantage over the market in predicting firm-specific events. This creates information asymmetry between managers of the firm and the market. The purpose of this paper is to investigate the relationship between firm value and information asymmetry in Vietnam. Our data include 202 non-financial companies with 606 firm-year observations collected from the two main stock exchange markets in Vietnam including Hanoi Stock Exchange and Ho Chi Minh Stock Exchange, covering 3 years from 2017-2019. The finding of this study indicates that two variables measuring information asymmetry (ASYDISP, ASYDUM) negatively impact firm value. Besides, control variables such as return on assets, leverage, firm size, and intangible assets are found to have significant effects on firm value.
Keywords:
Information asymmetry, firm value, Vietnamese listed firms.
References
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[2] Vo Xuan Vinh, and Craig Ellis, “An Empirical Investigation of Capital Structure and Firm Value in Vietnam,” Finance Research Letters 22 (2017) 90-94.
[3] Noe, T.H., Vivian W.F., and Sheri T., “Stock Market Liquidity and Firm Value,” Journal of Financial Economics 94 (2009) 150-169.
[4] Udochukwu Godfrey Ogbonna, and Chukwu Agwu Ejem, “Dynamic Modeling of Market Value and Capital Structure in Nigerian Firms,” International Journal of Economics and Financial Issues 10 (1) (2019) 1-5.
[5] Beyer, A., D. A. Cohen, T. Z. Lys, and B. R. Walther, “The Financial Reporting Environment: Review of the Recent Literature,” Journal of Accounting and Economics 50 (2-3) 296-343.
[6] Ross, S., “The Determination of Financial Structure: The Incentive Signaling Approach,” Bell Journal of Economics 8 (1977) 1-32.
[7] Myers, S., and N. Majluf, “Corporate Financing and Investment Decisions When Firms Have Information That Investors Do Not Have,” Journal of Financial Economics 13 (1984)187–221.
[8] Sadok El Ghoul, et al,. “Does Information Asymmetry Matter to Equity Pricing? Evidence from Firms’ Geographic Location: Does Information Asymmetry Matter to Equity Pricing?,” Contemporary Accounting Research 30 (1) (2013) 140-181.
[9] Hughes, J. S., L. Jing, and J. Liu, “Information Asymmetry, Diversification, and Cost of Capital,” The Accounting Review 82 (3) (2007) 705–29.
[10] Nguyen, V., N., Tran, T., A. & Phan, G., T, “Level of Asymmetric Information: Evidence from Companies Listed on the Ho Chi Minh City Stock Exchange,” Business and Business Administration Journal 11(1) (2016).
[11] Nguyen V., D. & Nguyen T., H, “The Impact of Asymmetric Information on the Cost of Capital of Vietnamese Listed Companies,” Business and Development Journal 226 (2016).
[12] Nguyen, T., H & Le, A., K, “The Econometric Model Determines the Degree of Information Asymmetry: The Situation of the Ho Chi Minh Stock Market,” Economics Development Journal 213 (2008).
[13] Akerlof, G. A, “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism,” Quarterly Journal of Economics, 84 (3) (1970) 488-500.
[14] Leland, H. E., & Pyle, D. H., “Information Asymmetries, Financial Structure, and Financial Intermediation,” The Journal of Finance, 32 (2) (1977) 371-387.
[15] Eckhardt, Jonathan T, and Scott A Shane, “Opportunities and Entrepreneurship.” Journal of Management 29 (3) (2003) 333-349.
[16] Hutton, A. P., Marcus, A. J., & Tehranian, H., “Opaque Financial Reports, R2, and Crash Risk,” Journal of Financial Economics, 94 (1) (2009) 67-86.
[17] Kothari, S. P., Shu, S., & Wysocki, P. D “Do Managers Withhold Bad News?,” Journal of Accounting Research, 47(1) (2009) 241-276.
[18] Kim, J. B., Li, Y., & Zhang, L., “FOs Versus CEOs: Equity Incentives and Crashes,” Journal of Financial Economics, 101 (3) (2011) 713-730.
[19] Botosan, C. A., “Disclosure Level and the Cost of Equity Capital,” The Accounting Review, 72 (3) (1997) 323-349.
[20] Ryen, T. G., Vasconcellos, M. G., & Kish, J. R., “Capital Structure Decisions: What Have We Learned?,” Business Horizons Journal, 40 (5) (1997) 41-50.
[21] Krishnaswami, S., and V. Subramaniam, “Information Asymmetry, Valuation, and the Corporate Spin-off Decision,” Journal of Financial Economics, 53 (1999) 73-112.
[22] Fosu, S., Danso, A., Ahmad, W., & Coffie, W., “Information Asymmetry, Leverage and Firm Value: Do Crisis and Growth Matter?,” International Review of Financial Analysis, 46 (2016) 140–150.
[23] Rajan, R., and L. Zingales, “What Do We Know About Capital Structure: Some Evidence from International Data,” Journal of Finance 50 (1995)1421-60.
[24] Opler, T., L. Pinkowitz, R. Stulz, and R. Williamson, “The Determinants and Implications of Corporate Cash Holdings,” Journal of Financial Economics, 52 (1999) 3-46.
[25] Margaritis, Dimitris, and Maria Psillaki, “Capital Structure, Equity Ownership and Firm Performance,” Journal of Banking & Finance, 34 (3) (2010) 621-632.
[26] Freund, R. J., Wilson, W. J., & Sa, P., “Regression Analysis - Statistical Modeling of a response variable,” San Diego: Elsevier, 459 (2006).
[27] B. H. Baltagi, “A Hausman Test Based on the Difference Between Fixed Effects Two-Stage Least Squares and Error Components Two-Stage Least Squares,” Econometric Theory, 21(2) (2005) 483-484.
[28] Croci, E., Gonenc, H. and Ozkan, N., “CEO Compensation, Family Control, and Institutional Investors in Continental Europe,” Journal of Banking & Finance, 36 (2012) 3318-335.
[29] Ozkan, A., Ozkan, N., “Corporate Cash Holdings: An Empirical Investigation of UK Companies,” Journal of Banking and Finance, 28 (2004) 2103-2134