Does Disclosure Quality via Investor Relations Affect Information Asymmetry?

Chang, Millicent; D'Anna, Gino; Watson, Iain; Wee, Marvin

doi:10.1177/031289620803300208

Cited by 83 publications

(69 citation statements)

References 37 publications

(79 reference statements)

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“…These correlations are all, as expected, and are consistent with the results of former studies that have used these company characteristics to confirm the validity of their measurement instruments (as used to measure website contents - Chang et al, 2008;Orens et al, 2010;Trabelsi et al, 2008;Froidevaux, 2004).…”

supporting

confidence: 90%

“…Regarding studies that assigned weights to individual attributes, it is further possible to distinguish between the assignment of weights to reflect the degree of detail 8 Cormier, Ledoux & Magnan, 2009;Orens et al, 2010Orens et al, : 1066 and to reflect the perceived importance thereof for users (Larrán & Giner, 2002: 75;Chang et al, 2008;Lai, Lin, Li & Wu, 2010).…”

Section: The Use Of Weightsmentioning

confidence: 99%

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The development of a measurement instrument to measure the quality of internet investor relations

Nel

Brümmer

2016

SAJBM

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The purpose of this study was to develop a measurement instrument to measure the quality of Internet investor relations (IIR). This study will aid future research to examine IIR and provide guidance to companies in the development of an IIR strategy. The development of the instrument was based on best practice guidelines issued by the Investor Relations Society, an extensive literature review and a pilot study. The result was a measurement instrument that consists of 346 attributes.Quality is assessed by measuring content as widely as possible, by including attributes to measure the accessibility, navigation and timeliness of information, and by allowing for the measurement of attributes as being partially available based on breadth, usability and timeliness considerations. The reliability and validity of the measurement instrument was confirmed on the basis of the measurement results of a sample of 85 JSE-listed companies.

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supporting

confidence: 90%

Section: The Use Of Weightsmentioning

confidence: 99%

The development of a measurement instrument to measure the quality of internet investor relations

Nel

Brümmer

2016

SAJBM

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“…Specifi cally regarding the use of websites for IR, Chang et al (2008) found that Australian companies with websites having more information available showed greater analyst coverage, higher proportions of institutional investors, market capitalization, and trading volume. Chang, Hooi e Wee (2014) have shown the importance of active communication with analysts, especially in times of uncertainty, fi nding that disclosure by Australian companies on the internet correlate positively with accuracy of analysts' forecasts, in a scenario dominated by small companies with limited analyst coverage.…”

Section: Investor Relationsmentioning

confidence: 99%

“…So, the motivation of this study lies on the fact that IR activities are capable of aff ecting information asymmetry, changing the behavior of uninformed investors (Chang, D'anna, Watson & Wee, 2008). In this context, facilitating access to company information reduces the risk of private information trading, attracting investors and increasing the amount of stocks traded (Brown & Hillegeist, 2007).…”

Section: Introductionmentioning

confidence: 99%

Investor relations and information asymmetry

Rodrigues

Galdi

2017

Rev. contab. finanç.

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Companies invest significant volumes of resources in investor relations (IR) departments. The professionals working in the IR department are responsible for communication between the company and the market, so that the information generated is widely disseminated and understood by investors. In this context, this research aims to investigate whether there is evidence that the IR activity decreases information asymmetry between the company and the market. Specifically, we evaluate the hypothesis that Brazilian companies with IR websites classified as more informative have a reduced bid-ask spread (proxy for asymmetry). Therefore, this paper classifies the informative content from IR websites of Brazilian companies for the years 2013 and 2014 and relates the outcomes obtained with information asymmetry metrics. Initially, the estimation considers the pooled ordinary least squares (POLS) model and, at a second moment, in order to mitigate potential endogeneity problems, the pooled two-stage least squares (2SLS) model is used. The results indicate that more informative IR websites are able to decrease the bid-ask spread of Brazilian listed companies. This finding strongly encourages companies to provide information to stakeholders on well-structured IR websites of their own.

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“…Although there exists a substantial amount of research measuring the use of corporate websites as communication channel, both in South Africa (Barac 2004;Esterhuyse & Wingard 2016;Loxton 2003;Nel & Baard 2006;Venter 2002) and internationally (Aerts, Cormier & Magnan 2007;Chang et al 2008;Froidevaux 2004;Gajewski & Li 2015;Orens et al 2010;Trabelsi, Labelle & Dumontier 2008), the measurement instruments used by such studies are often criticised (as discussed in the literature review) and few of these studies explicitly measured investor relations.…”

Section: Introductionmentioning

confidence: 99%

The link between Internet investor relations and information asymmetry

Nel

Smit

Brümmer

2018

SAJEMS

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Background: Information asymmetry manifests when one party has more or better information than the other. Information asymmetry is said not only to increase transaction costs and decrease liquidity, but also to diminish the quality of the investment decisions taken by investors, thus weakening the overall functioning of markets. Aim and setting: A well-developed Internet investor relations (IIR) strategy, coupled with increased disclosure levels, should theoretically decrease information asymmetry levels. The majority of related studies to date used either an indirect disclosure proxy or involved an examination of the annual report, and have used data from United States or European companies. Empirical studies to date have produced mixed results. The aim of this study was to ascertain whether a relationship exists between the quality of IIR (via corporate websites) and information asymmetry. Method: This study used data from Johannesburg Stock Exchange (JSE)-listed companies. Multiple regression analysis was applied with information asymmetry as dependent variable and IIR as one of a set of selected explanatory variables. A self-constructed measurement instrument was used to measure IIR for a sample of 85 companies. Given the inherent difficulty with direct observation of information asymmetry, three different proxies were used to estimate information asymmetry. Results: A significant negative association was found between IIR and information asymmetry for all three information asymmetry proxies that were used: bid-ask spread, price impact, and analyst following. Conclusion: Empirical support is provided for the notion that companies may potentially benefit from a well-developed IIR strategy through reduced information asymmetry.

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Does Disclosure Quality via Investor Relations Affect Information Asymmetry?

Cited by 83 publications

References 37 publications

The development of a measurement instrument to measure the quality of internet investor relations

The development of a measurement instrument to measure the quality of internet investor relations

Investor relations and information asymmetry

The link between Internet investor relations and information asymmetry

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