Corporate Inertia and Information Asymmetry: Evidence from Iran

Document Type : Original Article

Authors

• Esmaeil Abdi ¹
• mehdi safari gerayli ²
• Yasser Rezaei Pitenoei ³

¹ Department of Accounting, Nour Branch, Islamic Azad University, Nour, Iran

² Department of Accounting, Bandargaz Branch, Islamic Azad University, Bandargaz,Iran

³ Assistant Professor of Accounting, University of Guilan, Rasht, Iran

10.22067/ijaaf.2022.76181.1130

Abstract

Over time, due to neglect of learning and making changes in their structure, companies suffer a kind of resistance to flexibility, which is referred to as "corporate inertia", which can have negative consequences in the capital market. Therefore, the present study investigates the effect of corporate inertia on firm's information asymmetry in the Iranian capital market. In the present study, we use meta-synthesis, Delphi analysis and finally questionnaire design to measure the inertia of the company. The mentioned questionnaire was sent to the managers of the sample companies, and finally 138 questionnaires were completed and returned and included in the statistical analysis. To measure information asymmetry, we uses three proxies include "BID-ASK SPREAD"; "TURNOVER" and "ILIQ". The results showed that company inertia has a positive and significant effect on information asymmetry. The results show that corporate inertia gives managers a kind of utilitarian identity and in terms of individual insight characteristics; Perceptual and structural, they form a kind of possessive approach according to which the interests of the stakeholders are not given priority to them and by creating a monopoly on information disclosure, they increase information asymmetry.

Keywords

• Corporate Inertia
• Information Asymmetry
• Inflexibility

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