University of Sussex
Browse
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?

Download (600.23 kB)
journal contribution
posted on 2023-06-10, 03:30 authored by Samuel FosuSamuel Fosu, Albert Danso, Wasim Ahmad, William Coffie
Drawing 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

1057-5219

Publisher

Elsevier

Volume

46

Page range

140-150

Department affiliated with

  • Accounting and Finance Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2022-05-11

First Open Access (FOA) Date

2022-05-11

First Compliant Deposit (FCD) Date

2022-05-11

Usage metrics

    University of Sussex (Publications)

    Categories

    No categories selected

    Exports

    RefWorks
    BibTeX
    Ref. manager
    Endnote
    DataCite
    NLM
    DC