Dividend and investment decisions in asymmetric information environments: evidence from the restaurant industry

Jaehee Gim, Soo Cheong (Shawn) Jang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

2 Citations (Scopus)


Purpose: This study aims to examine how information asymmetry, which refers to an information gap between a firm’s management and its investors regarding the firm’s true value, influences firms’ dividend and investment decisions in the restaurant industry. This study also investigated the moderating role of a firm’s level of franchising in the relationship between information asymmetry and these behaviors of restaurant firms. Design/methodology/approach: This study used generalized method of moments panel regression analyses. Principal component analysis was also used to create a composite index of information symmetry. Findings: This study demonstrated that in asymmetric information environments, restaurant managers tend to reduce dividend payments. In addition, this study showed that information asymmetry leads to restaurant managers’ investment inefficiency. However, the investment inefficiency of the restaurant industry was found to decrease as restaurant firms’ level of franchising increases. Practical implications: Firms’ dividends and investment decisions are of great interest to investors because these decisions heavily influence investors’ wealth-maximization goals. By shedding light on the previously unrecognized determinants of dividend and investment behaviors in the restaurant industry, this study helps individual investors to make informed investing decisions. Originality/value: Conflicting arguments can be made regarding the impact of asymmetric information environments on the dividend and investment behaviors of restaurant firms. This study aimed to verify these as-yet unclear relationships in the restaurant industry.

Original languageEnglish
Pages (from-to)1779-1801
Number of pages23
JournalInternational Journal of Contemporary Hospitality Management
Issue number5
Publication statusPublished - 10 Apr 2023


  • Bid–ask spread
  • Information asymmetry
  • Restaurant industry

ASJC Scopus subject areas

  • Tourism, Leisure and Hospitality Management


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