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.2024.430771130

Abstract

Corporate inertia, stemming from a reluctance to adapt and innovate over time, poses significant challenges in the modern business landscape, particularly in capital markets. This study examines the impact of corporate inertia on information assymetry within the Iranian capital market. Employing a comprehensive research approach involving meta-synthesis, Delphi analysis, and questionnaire design, we assess corporate inertia. Questionnaires were distributed to managers of sampled companies, with 138 responses included in the statistical analysis. Information asymmetry is measured using three proxies: bid-ask spread, turnover, and the liquidity of the company's stock. The findings indicate a positive and significant relationship between corporate inertia and information assymetry. Our results suggest that corporate inertia fosters a managerial mindset characterized by insularity and resistance to change. This mindset prioritizes individual insights over stakeholder interests, resulting in a monopolistic control of information disclosure that exacerbates information assymetry in the market.

Keywords

• Corporate Inertia
• Information Asymmetry
• Iranian Capital Market
• Managerial Resistance

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