The link between internet investor relations and information asymmetry

dc.contributor.authorNel, George F.
dc.contributor.authorSmit, Eon
dc.contributor.authorBrummer, Leon Marx
dc.date.accessioned2018-09-20T05:42:13Z
dc.date.available2018-09-20T05:42:13Z
dc.date.issued2018-04-12
dc.descriptionThis article is partially based on the first author, George F. Nel’s dissertation presented for the degree of Doctor of Philosophy (PhD) in Business Management and Administration at Stellenbosch University, with Promotor Prof. E.v.d.M. Smit and co-promotor Prof. L. Brummer, received December 2016, available here: http://scholar.sun.ac.za/handle/10019.1/100275en_ZA
dc.description.abstractBACKGROUND : 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.en_ZA
dc.description.departmentFinancial Managementen_ZA
dc.description.librarianam2018en_ZA
dc.description.urihttp://www.sajems.orgen_ZA
dc.identifier.citationNel, G.F., Smit, E. & Brummer, L.M., 2018, ‘The link between Internet investor relations and information asymmetry’, South African Journal of Economic and Management Sciences 21(1), a1966. https://DOI.org/10.4102/sajems.v21i1.1966.en_ZA
dc.identifier.issn1015-8812 (print)
dc.identifier.issn2222-3436 (online)
dc.identifier.other10.4102/sajems.v21i1.1966
dc.identifier.urihttp://hdl.handle.net/2263/66593
dc.language.isoenen_ZA
dc.publisherUniversity of Pretoria, Department of Economicsen_ZA
dc.rights© 2018. The Authors. Licensee: AOSIS. This work is licensed under the Creative Commons Attribution License.en_ZA
dc.subjectInformation asymmetry levelsen_ZA
dc.subjectCompaniesen_ZA
dc.subjectDeterminantsen_ZA
dc.subjectEquityen_ZA
dc.subjectCompaniesen_ZA
dc.subjectCostsen_ZA
dc.subjectQualityen_ZA
dc.subjectAnalyst behavioren_ZA
dc.subjectMarket liquidityen_ZA
dc.subjectJohannesburg Stock Exchange (JSE)en_ZA
dc.subjectInternet investor relations (IIR)en_ZA
dc.titleThe link between internet investor relations and information asymmetryen_ZA
dc.typeArticleen_ZA

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