The Effect of Board Independence on Information Asymmetry

Beng Wee Goh, Jimmy Lee, Tee Yong Ng, Kevin Ow Yong

Research output: Journal article publicationJournal articleAcademic researchpeer-review

13 Citations (Scopus)

Abstract

Boards have an important role in ensuring that investors’ interests are protected. Our paper first examines whether the independence of a firm's board affects information asymmetry among investors. We provide evidence that greater board independence leads to lower information asymmetry. Next, we provide evidence that more voluntary disclosure and greater analyst coverage are two underlying mechanisms via which greater board independence reduces information asymmetry. Of the two mechanisms, we find that analyst coverage is more significant in influencing how board independence affects information asymmetry. Overall, our paper contributes to a better understanding of the effect of board independence on information asymmetry.
Original languageEnglish
Pages (from-to)155-182
Number of pages28
JournalEuropean Accounting Review
Volume25
Issue number1
DOIs
Publication statusPublished - 2 Jan 2016
Externally publishedYes

ASJC Scopus subject areas

  • Accounting

Cite this