Information Asymmetry, the Role of Intermediaries, and Underpricing in the Global Debt Market

2021 ◽  
Vol 2021 (1) ◽  
pp. 12941
Author(s):  
Thomas Lindner
Keyword(s):  
Information Asymmetry ◽  
Debt Market

Implementasi Asas Keterbukaan pada Pengadaan Tanah bagi Pembangunan untuk Kepentingan Umum: Antara Harapan dan Kenyataan

2020 ◽  
Vol 6 (1) ◽  
Author(s):  
Priyo Katon Prasetyo ◽  
Rosye Villanova Christine ◽  
Sudibyanung Sudibyanung
Keyword(s):  
Information Asymmetry ◽  
Case Studies ◽  
Public Interest ◽  
Economic Inequality ◽  
Land Acquisition ◽  
The Public ◽  
Land Scarcity ◽  
Library Research ◽  
Role Of Information

Abstract: Based on Law Number 2 of 2012 concerning Land Acquisition for Development in the Public Interest, the Openness Principle is one of the ten principles as the basis of the implementation of development. This principle is significant because its complex role can lead to conflicts and disputes. In this paper, discussions are divided into two parts: 1) how the implementation is expected to be applied according to the acquisition procedure in theory; and 2) the reality that occurs in the field. The first discussion was conducted by reviewing the applicable regulations and the methods or concepts of development of the openness principle. Meanwhile, the second discussion about the reality on the field was conducted by elaborating case studies regarding problems in land acquisition. The results of this study indicate that there are gaps in the implementation of the openness principle between theory and reality in regards of land scarcity, economic inequality, and information asymmetry among the involved parties. In conclusion, the implementation of the openness principle is significant with the role of information in land acquisition.Intisari: Berdasarkan Undang Undang Nomor 2 Tahun 2012 tentang Pengadaan Tanah Bagi Pembangunan Untuk Kepentingan Umum, Asas Keterbukaan adalah salah satu dari sepuluh asas yang menjadi dasar pelaksanaannya. Asas ini menjadi signifikan karena perannya yang kompleks dapat menimbulkan konflik dan sengketa. Artikel ini akan membagi pembahasan menjadi dua bagian: pertama, bagaimana implementasi yang seharusnya diterapkan pada prosedur pengadaan secara harapan, dan kedua, membahas mengenai realita yang terjadi di lapangan. Secara harapan pembahasan dilakukan dengan melakukan library research atau studi terhadap peraturan yang berlaku dan metode-metode atau prinsip perkembangan dari asas keterbukaan. Realitas di lapangan akan dielaborasi dari studi kasus mengenai permasalahan dalam pengadaan tanah. Hasil dari penelitian ini menunjukkan ada gap dalam implementasi asas keterbukaan antara harapan dan realitas di lapangan yang bersumber dari kelangkaan sumber daya/tanah, ketimpangan ekonomi dan asimetri informasi di antara para pihak yang terlibat. Tulisan ini menyimpulkan bahwa implementasi asas keterbukaan signifikan dengan peran informasi dalam pengadaan tanah. 

Labor lawsuits and debt maturity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Omer Unsal
Keyword(s):  
Chief Executive ◽  
Debt Maturity ◽  
Employee Relations ◽  
Short Term ◽  
Content Type ◽  
Negative Effect ◽  
Debt Market ◽  
Legal Fees

Purpose This paper aims to investigate how firms’ relationships with employees define their debt maturity. The authors empirically test the role of employee litigations in influencing firms’ choice of short-term versus long-term debt. The authors study employee relations by analyzing the importance of the workplace environment on capital structure. Design/methodology/approach The author’s test hypotheses using a sample of US publicly traded firms between 2000 and 2017, including 3,056 unique firms with 4,256 unique chief executive officer, adopting the fixed effect panel model. Findings The authors document that employee litigations have a significant negative effect on the use of short-term debt and a significant positive affect on long-term debt. Employee litigations, along with legal fees, outcomes and charging parties, matter the most in explaining debt maturity. In addition, frequently sued firms abandon the short-term debt market and use less shareholders’ equity to finance their operations while relying more on the longer debt market. Originality/value To the best of the authors’ knowledge, this is the first study to examine the role of employee mistreatment in debt maturity choice. The study extends the lawsuit and finance literature by examining unique, hand-collected data sets of employee lawsuits, allegations, violations, settlements, charging parties, case outcomes and case durations.

Does Financial Reporting Conservatism Mitigate Underinvestment?

2017 ◽  
Vol 34 (2) ◽  
pp. 258-283 ◽  
Author(s):  
Hyun A. Hong ◽  
Yongtae Kim ◽  
Gerald J. Lobo
Keyword(s):  
Information Asymmetry ◽  
Cash Flow ◽  
Financial Reporting ◽  
Cash Flows ◽  
Agency Conflicts ◽  
Negative Relation ◽  
Investment Projects ◽  
External Capital ◽  
Cash Flow Volatility

This study examines the role of financial reporting conservatism in mitigating underinvestment problems. Recognizing that volatile cash flows increase the need to access external capital markets and that agency conflicts and information asymmetry make external capital costlier than internal capital, which leads managers to forgo valuable investment projects, Minton and Schrand document a negative relation between cash flow volatility and investment. We draw on Minton and Schrand’s framework to isolate underinvestment problems and hypothesize and document that conservatism mitigates the negative relation between cash flow volatility and investment and that this mitigative effect is more pronounced for firms with ex ante more severe agency conflicts. We also document that conservatism mitigates the sensitivity of investment to cash flow volatility by facilitating access to external capital.

Information asymmetry and equity issue decision of low-leverage firms

2018 ◽  
Vol 44 (11) ◽  
pp. 1330-1346
Author(s):  
Bipin Sony ◽  
Saumitra Bhaduri
Keyword(s):  
Information Asymmetry ◽  
Equity Issue ◽  
Content Type ◽  
Equity Issues ◽  
Developed Economies ◽  
Tangible Assets ◽  
Credit History ◽  
The Impact ◽  
Role Of Information

Purpose The purpose of this paper is to investigate the role of information asymmetry in the equity issue decision of two categories of Indian firms with distinct levels of information asymmetry – levered firms and unlevered firms. Design/methodology/approach This paper proposes a novel empirical approach to compare these two categories of firms. Levered firms exposed to the debt markets are under the scrutiny of lenders, reducing their information asymmetry problems. On the other hand, unlevered firms, which are smaller firms with fewer tangible assets and no credit history suffers more information problems. The authors use a propensity score matching method to identify firms that share similar firm-specific characteristics in these groups and compare equity issues to analyze the impact of information asymmetry. Findings The results show that information asymmetry plays a key role in the equity issue decision of Indian firms. Additionally, the authors find that the trends and characteristics of low-leverage (LL) firms in India are comparable to the LL from developed economies, which is consistent with the findings that they face more information problems. Originality/value Unlike the conventional approach of using proxy variables to capture information asymmetry, this study uses a novel framework where the authors compare the equity issue decision of similar firms in two categories with different degrees of information asymmetry.

scholarly journals Leverage and firm investment: the role of information asymmetry and growth

2019 ◽  
Vol 27 (1) ◽  
pp. 56-73 ◽  
Author(s):  
Albert Danso ◽  
Theophilus Lartey ◽  
Samuel Fosu ◽  
Samuel Owusu-Agyei ◽  
Moshfique Uddin
Keyword(s):  
Information Asymmetry ◽  
High Growth ◽  
Firm Investment ◽  
Financial Leverage ◽  
Content Type ◽  
Growth Firms ◽  
The Impact ◽  
The Relationship ◽  
Role Of Information

PurposeThis paper aims to demonstrate how financial leverage impacts firm investment and the extent to which this relationship is conditional on the level of information asymmetry as well as growth.Design/methodology/approachThe paper relies on data from 2,403 Indian firms during the period 1995-2014, generating a total of 19,544 firm-year observations. Analysis is conducted by using various panel econometric techniques.FindingsDrawing insights from agency theories, the paper uncovers that financial leverage is negatively and significantly related to firm investment. It is also observed that the impact of financial leverage on firm investment is significant for high information asymmetric firms. Finally, the paper shows that the relationship between leverage and firm investment is significant for low-growth firms. However, no significant relationship is found between leverage and investment for high-growth firms.Originality/valueThis paper provides fresh evidence on the leverage–investment nexus and, to the authors’ knowledge, it the first paper to examine the extent to which this leverage–investment relationship is driven by the level of information asymmetry.

Intermediation in Private Equity: The Role of Placement Agents

2019 ◽  
Vol 55 (4) ◽  
pp. 1095-1116
Author(s):  
Matthew D. Cain ◽  
Stephen B. McKeon ◽  
Steven Davidoff Solomon
Keyword(s):  
Real Estate ◽  
Information Asymmetry ◽  
Private Equity ◽  
Abnormal Returns ◽  
Theoretical Predictions ◽  
Illiquid Investments ◽  
First Time ◽  
High Information

Intermediation in private equity involves illiquid investments, professional investors, and high information asymmetry. We use this unique setting to empirically evaluate theoretical predictions regarding intermediation. Using placement agents has become nearly ubiquitous, but agents are associated with significantly lower abnormal returns in venture and real estate funds, consistent with investor capture and influence peddling. However, returns are higher for buyout funds employing a top-tier agent and for first-time real estate and venture funds employing an agent, and are less volatile for agent-affiliated funds, consistent with a certification role. Our results suggest heterogeneous motives for intermediation in the private equity industry.

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