Information Asymmetry, Leverage and Firm Value - Do Crisis and Growth Matter.pdf (600.23 kB)
Information asymmetry, leverage and firm value: do crisis and growth matter?
journal contribution
posted on 2023-06-10, 03:30 authored by Samuel FosuSamuel Fosu, Albert Danso, Wasim Ahmad, William CoffieDrawing on pecking order and agency cost theories, we assess the extent to which information asymmetry is an important determinant of firm value and the extent to which this relationship is conditional on the leverage level of firms. We also assess the impact of information asymmetry on firm value during the pre and post 2007/09 financial crisis period and for high and low growth opportunity firms. Using a large sample of UK firms, our empirical findings suggest that information asymmetry adversely impacts firm value, and that this effect decreases with firm's leverage. We also find that leverage has a negative effect on firm value, and that the marginal effect of leverage is lower for information asymmetric firms. Further, we find that the relation between information asymmetry and firm value is more pronounced in the post-crisis period than the pre-crisis period. Finally, we show that the impact of information asymmetry on firm value is higher (lower) for firms with high (low) growth opportunities.
History
Publication status
- Published
File Version
- Accepted version
Journal
International Review of Financial Analysis (IRFA)ISSN
1057-5219Publisher
ElsevierExternal DOI
Volume
46Page range
140-150Department affiliated with
- Accounting and Finance Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2022-05-11First Open Access (FOA) Date
2022-05-11First Compliant Deposit (FCD) Date
2022-05-11Usage metrics
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