Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/23862
Title: How does ownership concentration exacerbate information asymmetry among equity investors?
Authors: Byun, HY
Hwang, LS
Lee, WJ
Keywords: Analyst following
Chaebol
Concentrated ownership
Information asymmetry
Probability of informed trading
Issue Date: 2011
Publisher: North-Holland
Source: Pacific basin finance journal, 2011, v. 19, no. 5, p. 511-534 How to cite?
Journal: Pacific basin finance journal 
Abstract: This study investigates the association between ownership concentration and information asymmetry between informed and uninformed investors, and explores several mechanisms that mitigate such a relation. Using a large sample of Korean firms whose ownership structure is highly concentrated, we find that the degree of information asymmetry increases with ownership concentration. We also find that ownership concentration is positively associated with information asymmetry via an increase in the relative amount of informed trading. This effect more than overcomes the unexpected decrease in the frequency of private information events. Furthermore, while neither institutional investors nor internal corporate governance systems help alleviate the negative effects of ownership concentration, analyst following reduces the information asymmetry associated with ownership concentration. Our findings are robust to endogeneity concerns, additional control variables, and an alternative use of empirical proxies.
URI: http://hdl.handle.net/10397/23862
ISSN: 0927-538X
DOI: 10.1016/j.pacfin.2011.06.002
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