MASTER THESIS
MNCs’ FOREIGN INVOLVEMENT AND INFORMATION
ASYMMETRY
By
Francesco Rosignoli
Supervisor : Dr R. Zaal
Co-Assessor : Dr S. Homroy
Submitted for the degree of
Msc International Financial Management
Faculty of Economics and Business
Rijkuniversiteit Groningen
f.rosignoli@student.rug.nl
S3335534
Abstract
This thesis examines the relationship between information asymmetry and MNCs’ foreign involvement by analyzing a sample of 6920 firms (20676 firm-year observations) operating internationally in 57 different countries over the period of 2010-2015. Moreover, this study addresses the importance of CSR disclosure and investor protection and their moderating effect on the relationship between information asymmetry and foreign involvement. More specifically, CSR is developed as firm-level moderator while investor protection is employed in the analysis as country-level moderator. The results of this study show that the degree of foreign involvement is not positively but rather negatively associated with information asymmetry, suggesting less information asymmetry between managers and shareholders when board members attend meetings regularly. Additionally, I employ two measures for CSR. The analysis indicates that companies’ social disclosure positively impacts the main relationship while there is no statistical evidence regarding the moderating role of companies’ environmental disclosure. Ultimately, the results further suggest that investor protection weakens the negative association between information asymmetry and foreign involvement.
1. Introduction ... 3
2. Literature Review and Hypothesis Development ... 9
2.1 Relationship between information asymmetry and foreign involvement ... 9
2.2 CSR as moderator of the information asymmetry – foreign involvement relationship ... 13
2.3 Investor protection and its role in mitigating information asymmetry ... 17
3. Methodology ... 21
3.1 Data and sample ... 21
3.2 Variables, measures and regression model ... 21
3.2.1 Measuring information asymmetry ... 22
3.2.2 Measuring foreign involvement ... 24
3.2.3 Firm-level moderator ... 24
3.2.4 Country level moderator ... 25
1. Introduction
A large amount of the literature suggests that the quality of the outside investors’ informational environment has always been a great concern for firms, since it significantly influences MNCs’ cost of capital, investment decisions and decision making process. (Aabo, T., Pantzalis, C., & Park, J. C., 2015). For instance, Barron et al. (2012), study whether information asymmetry directly affects companies’ cost of capital. Their findings suggest that companies’ information environment affects the cost of capital and more specifically that information asymmetries reduces companies’ cost of capital when the public information disclosed by companies is low. Therefore, MNCs are likely to be negatively affected by several informational frictions. Due to their complexity, informational asymmetries arising from MNCs’ foreign operational network are likely to have a significant impact inside and outside the company. In fact, lack of communication between the central Head Quarter and divisional managers as well as information asymmetry between managers and shareholders, strongly impact firm’ decision-making, value and lastly the monitoring of the board of directors. All these problems are further accentuated in the case of globally diversified firms; information asymmetry is likely to increase the cost of monitoring and ultimately reduces the firm’s performance (Fosu et al., 2016; Vafeas et al., 1999).
Although previous literature attempted to define CSR such as “actions that further the needs or goals of stakeholder groups or the larger social collective beyond the interests of the firm or what is required by the law” (El Ghoule et al., 2017); this research posits that when companies disclose social and environmental information regarding the impact of their activities then, information frictions between managers and shareholder are reduced and this in turn creates a more transparent environment within the company (Semenescu, A., & Curmei, C. V., 2015). In fact, CSR has recently become a key business practice especially for MNCs since it increases corporate governance effectiveness, alleviates public concern and, most importantly generates robust relationships between the firm and external stakeholders and thus reduces the cost of capital for companies. Therefore, this study aims to contribute to the existing literature by answering the empirical question of the moderating role that CSR has on the information asymmetry- foreign involvement association.
increase informational frictions within the firm. In most cases information asymmetry and investor protection are being considered opposite concepts. However, this research contributes to the existing literature by suggesting that the level of investor protection is likely to have a significant impact as well as implications for, the level of information asymmetry in foreign involved firms. More specifically, I expect to confirm the findings of previous studies that have assumed that a strong and better investor protection is likely to decrease informational frictions between managers and shareholders.
Previous literature pointed out that MNCs are likely to suffer from harmful agency problems which are due to factors such as residual losses and monitoring expenditures (Jensen et al., 1976). In this sense, conflicts of interests between managers and shareholders can negatively impact firms’ value and performance (Xiao et al., 2012). Opportunistic managers tend to divert corporate resources in order to derive private benefits at the expense of shareholders (John et al., 2008). Based on the principles of agency theory, this study focuses on the relationship between foreign involvement and information asymmetry. More specifically, foreign involvement is described as MNCs’ foreign operational network while information asymmetry refers to the quality of investors’ information environment in terms of understanding whether managers have an informational advantage over investors. Additionally, this paper investigates whether and how Corporate Social Responsibility and investor protection affect the relationship between foreign involvement and information asymmetry.
In order to examine the aforementioned relationships as well as possible moderating effects, I consider a sample of 6920 firms (20676 firm-year observations) operating internationally over the period 2010-2015.
score (SOCSCORE) positively impact the association between information asymmetry and foreign involvement while the companies’ impact on the environment (ENVSCORE) does not have a moderating role. In addition, I test for the moderating role of investor protection which is employed in the analysis as country level moderator. The analysis indicates that the level of investor protection weakens the negative relationship found. Hence, this thesis argues that companies characterized by substantial foreign network and that are therefore highly engaged in foreign operations are more likely to suffer from information asymmetry between managers and shareholders due to the negative impact of the level of investor protection.
The discussion of this study proceeds as follows. The next section provides a discussion of the related literature and presents the hypothesis developed. Then, Section 3 focuses on the sample selection process as well as the description and measurement of all the variables employed in the analysis. Section 4 reports the empirical results in order to test the hypothesis developed and further includes the robustness of the results obtained. Ultimately, Section 5 concludes and highlights possible limitations of this study.
2.Literature Review and Hypothesis Development
2.1 Relationship between information asymmetry and foreign involvement
associated with less disclosure of information compared to their domestic peers. Furthermore, all of these studies show that greater involvement in foreign operations is likely to lead to higher information disclosure and that this in turn would decreases information asymmetry between managers and shareholders. In other words, this would imply that MNC’s foreign involvement and information asymmetry are negatively associated.
Despite contradicting findings regarding the relationship between MNCs’ foreign involvement and information asymmetry, this study suggests a positive relationship between the two variables. Stated formally, I hypothesize firstly the following:
2.2 CSR as moderator of the information asymmetry – foreign involvement
relationship
their activities on the environment as well as on society. Based on the findings of Lopatta et al., and since CSR is associated with benefits such higher moral standards and greater transparency, I formulate two different hypotheses based on two different measures for CSR :
H2a: The positive relationship between information asymmetry and foreign involvement is weaker when companies disclose valuable social information about their activities
2.3 Investor protection and its role in mitigating information asymmetry
asymmetry as in this kind of environment managers would not be able to obtain private benefits at the expense of the shareholders and firms would provide better transparency.
Therefore, I hypothesize the following:
3. Methodology
3.1 Data and sample
I obtained the initial sample from Thomson Reuters Datastream Asset4, a leading financial and macroeconomic data platform which provides information on equities, company fundamentals, fixed income securities, currencies and other key economic indicators for 175 countries and 60 different markets for a period of six years (2010-2015). Then, following Aabo et al., (2014), I restricted the full sample of firms by omitting financial firms and utilities (SIC codes 4900-4999, 6000-6999) and firms with unclear industry classification (i.e. missing SIC codes). Thus, based on the availability of data I used the ISIN code in order to gather firm-level data. Moreover, I considered firms with available information on foreign sales, which I used to construct the measure of the degree of foreign involvement. Firm-level data as well as country-level data are gathered from the same platform. These requirements result in an unbalanced panel of 6920 firms (20676 firm-year observations) that operate internationally in 57 different countries over a period of six years (2010- 2015). Then, I winsorized all the accounting and financial data at the 1st percentile in order to eliminate extreme values (outliers) that could heavily influence the statistics and results.
3.2 Variables, measures and regression model
engaged in foreign operations are more likely to be affected by informational frictions between managers and shareholders and not vice versa. More specifically, I took into account lagged value of the dependent variable while I used lagged values of the independent variables at t-1. This section reports the description of all the variables employed in the analysis along with the regression model.
3.2.1 Measuring information asymmetry
provide additional information and that this in turn contributes to increase the level of transparency. In the same line of thought, Brick and Chidambaran (2010) argue that frequent board and audit committee meetings increase firm value as well growth opportunities. In addition, board meetings attendance has an impact on the level of information asymmetry. Higher participation in board meetings is likely to considerably decrease the level of information asymmetry and increase the level of efficiency. Ferris et al. (2003), argues that directors serving multiple boards are often unable to provide less monitoring and useful advice. Similarly, Masulis et al. (2012), argue that the geographical distance from the general headquarter is likely to increase information asymmetries as well as oversight costs. Moreover, due to time constraints, directors who continuously serve multiple boards do not always provide effective monitoring and their limited attention may lead to consequences which negatively affect the firm’s performance (Brent, 2012). Hence, regular attendance at board meetings imply more transparency because it shows strong commitment by directors which are also likely to provide and ask more detailed information about the company’s performance and operations. Thus, the above-mention studies have assumed a negative correlation between board characteristics (such as the size of the board of directors, frequency of board meetings and board meetings attendance) and information asymmetry. Therefore, based on these studies and since board characteristics are likely to directly impact the level of information asymmetry and transparency within the company, I measured information asymmetry as the average board meetings attendance. Hence:
3.2.2 Measuring foreign involvement
Although, a large amount of the existing literature has suggested that multinationality consists of different aspects that cannot be precisely captured by a single measure. I followed the study of Aabo et al. (2014), in which they study the impact of multinationality on opaqueness. According to Doukas and Pantzalis (2003) and Kim and Pantzalis (2003), expanding the MNCs’ foreign operational network, in terms of foreign sales ratios, should make the firm more complex from an outside investor’s perspective. Thus, the firm's informational environment could worsen compared to the case in which the MNCs’ expansion is coupled with limited foreign involvement. Thus, because the structure of the MNCs’ foreign operations is important, I measured the degree of foreign involvement of a multinational firm by taking into account its foreign sales ratios, which is the foreign sales over the total sales of the company.
FSALES = Foreign sales ratio = Foreign sales / Total sales
3.2.3 Firm-level moderator
quality (Lou et al., 2013). Thus, this study aims to investigate whether and how CSR disclosure plays a moderating role on the foreign involvement-information asymmetry relationship.
SOCSCORE = Social score ( trust and loyalty generated trough best management practices) ENVSCORE = Environmental score ( company's impact on living and non-living natural systems)
3.2.4 Country level moderator
The existing literature has extensively focused on the various fundamental roles of investor protection. Because accounting plays a crucial role in corporate governance, I measured the level of investor protection across countries as the quality of accounting disclosure standards (ASR) presented in the study of La Porta et al. ( 1998). Based on the findings of John et al. (2008), this study argues that “strong” accounting standards are likely to lead to better investor protection and thus make it more difficult for insiders to divert corporate resources at the expense of shareholders. Thus, I expect that investor protection can be used as an efficient instrument to mitigate and influence the main relationship between information asymmetry and MNCs’ foreign network.
3.2.5 Control variables
degree of foreign involvement and information asymmetry between managers and shareholders. The following formulas describe the control variables used in this study:
MTB = Market-to-book-ratio = [(market value of equity + book value of debt)/ book value of total assets]
SIZE = Firm size = natural logarithm of total assets LEV = Leverage = book value of debt / book value of total assets
3.2.6 Regression model
The basic regression model is as follows:
(1) ABMAi,t = α0 + α1FSALESi,t-1 + α2ENVSCOREi,t-1 + α3SOCSCOREi,t-1+ α4INVPROi,t-1+
α5ENVSCOREi,t-1 *FSALESi,t-1 + α6SOCSCOREi,t-1 *FSALESi.t-1 + α7INVPROi,t-1 *
FSALESi,t-1+ α8SIZEi,t-1 + α9MTBi,t-1+ α10B.SIZEi,t-1+ α11LEVERAGEi,t-1 + Ɛi,t
4. Empirical Results
This section further provides information regarding descriptive statistics, correlations , multivariate and robustness analysis on the relation between information asymmetry and foreign involvement.
4.1 Descriptive statistics
Table 1 – Descriptive statistics of firm-level and country variables
Variables N Mean Std.Dev. Min Max
ABMA 11,834 0.890 0.010 0.010 1.000 FSALES 15,390 0.412 0.345 0.000 1.000 ENVSCORE 15,267 0.545 0.317 0.084 0.951 SOCSCORE 16,267 0.546 0.305 0.034 0.976 INVPRO 19,716 0.694 0.067 0.240 0.830 MTB 16,483 0.014 0.013 0.003 0.067 SIZE 16,897 0.073 0.012 0.051 0.105 LEV 16,893 0.002 0.001 0.000 0.008 BSIZE 16,494 0.103 0.035 0.010 0.370
Note: Table 1 reports summary descriptive statistics of the variables employed in the empirical analysis, including depend, independent, country and firm-level variables and finally control variables. The sample period includes 6 years- observation (2010-2015). Information asymmetry = ABMA. FSALES = degree of foreign involvement. ENVSCORE and SOCSCORE = CSR. INVPRO = Investor protection. MTB = Market-to-book ratio. SIZE = firm size. LEV = Leverage. BSIZE = size of the board.
4.2 Correlation analyses
Table 2 provides information about the correlated coefficients employed in the analysis. Consistent with previous literature, the analysis indicates that information asymmetry proxied as average of board meetings attendance (ABMA) and the degree of foreign involvement (FSALES) are positively and significantly correlated. On the other hand, the analysis indicated that Market-to-book ratio (MTB), Leverage (LEV) and SIZE are negatively associated with ABMA. Lastly, the size of the board (BSIZE) is positively associated with ABMA. Nevertheless, due to possible interactions as well as effects caused by the variables employed, I used a multivariate analysis to test the hypotheses developed in Section 2.
Table 2 – correlation sample
ABMA FSALES ENVSCORE SOCSCORE INVPRO MTB LEV SIZE BSIZE ABMA 1 FSALES 0.088*** 1 ENVSCORE 0.078*** 0.255*** 1 SOCSCORE 0.087*** 0.236*** 0.815*** 1 INVPRO 0.203*** 0.036*** -0.092*** -0.102** 1 MTB -0,099** 0.048*** -0.123*** -0.082*** -0.022 1 LEV -0.019* 0.006* 0.023* 0.018 -0.023 -0.002 1 SIZE -0.011 -0.008* 0.011 0.011 -0.004 -0.014 0.069*** 1 BSIZE 0.001 0.007 -0.007 0.005 0.004 -0.016 -0.008 -0.003 1
4.3 Multivariate analyses
Table 3 – OLS regression outputs
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
FSALES 0.027*** -0.004*** 0.036*** 0.157*** 0.109** [0.003] [0.007] [0.003] [0.051] [0.052] ENVSCORE 0.014* 0.024** 0.018* [0.007] [0.011] [0.010] SOCSCORE 0.005 -0.028** -0.054 [0.007] [0.011] [0.011] INVPRO 0.344*** 0.422*** 0.415*** [0.025] [0.046] [0.046] MTB -0.887*** -0.436*** -0.425*** -0.443*** -0.424*** -0.325*** [0.113] [0.111] [0.111] [0.113] [0.113] [0.113] LEV -1.113* -1.346*** -1.339** -1.157* -1.165* -1.242*** [0.667] [0.651] [0.650] [0.660] [0.659] [0.656] SIZE -0.060 -0.073 -0.078 -0.117 -0.117 -0.078 [0.099] [0.099] [0.099] [0,099] [0.099] [0.098] BSIZE -0.0024 -0.014 -0.0131 -0.015 -0.013 0.013 [0.033] [0.033] [0.033] [0.033] [0.033] [0.033] FSALES X SOCSCORE 0.0008*** 0.0006*** [0.000] [0.000] FSALES X ENVSCORE -0.0008 -0.0005 [0.000] [0.000] FSALES X INVPRO -0.001** -0.036** [0.000] [0.000] Constant 93.999*** 93.375*** 94.776*** 67.961*** 63.375*** 63.323*** [1.207] [1.246] [1.279] [2.231] [3.609] [3.661] Country FE NO NO NO NO NO NO
Industry FE YES YES YES YES YES YES
Year FE YES YES YES YES YES YES
Adjusted R2 0.345 0.354 0.358 0.353 0.355 0.361
Observations 7259 7.259 7.259 6.920 6.920 6.920
4.4 Robustness analysis
Table 4 – Robustness analyses
Note:This table reports six different OLS regression models by considering an alternative measure for the independent variable (Foreign Involvement). The coefficients of each model are presented below. Standard errors are reported inside the parenthesis below each coefficient. The sample period runs from 2010 to 2015. All the models employ OLS regressions and robust standard errors. Industry and year fixed effects are included in the empirical analysis. Information asymmetry = ABMA. FASSETS = foreign assets. ENVSCORE and SOCSCORE = CSR. INVPRO = Investor protection. MTB = Market-to-book ratio. SIZE = firm size. LEV = Leverage. BSIZE = size of the board. ***, ** and *, denote statistical significance at 1%, 5% and 10% respectively.
Model 7 Model 8 Model 9 Model 10 Model 11 Model 12
FASSETS 0.050*** 0.026** 0.057*** 0.016 0.059** [0.004] [0.008] [0.004] [0.072] [0.072] ENVSCORE 0.020** 0.0189** 0.186** [0.007] [0.008] [0.088] SOCSCORE 0.104 0.0097 -0.098 [0.007] [0.009] [0.092] INVPRO 0.349*** 0.334*** 0.290*** [0.030] [0.042] [0.041] MTB -0.809*** -0.651*** -0.531*** -0.593*** -0.598*** -0.541*** [0.133] [0.108] [0.109] [0.110] [0.111] [0.110] LEV -1.893*** -1.347*** -1.236*** -1.332*** -1.329*** -1.230*** [0.968] [0.725] [0.718] [0.726] [0.726] [0.719] SIZE -0.077*** -1.152*** -0.857*** -0.291* -0.304* -0.891*** [0.077] [0.158] [0.192] [0.170] [0.077] [0.194] BSIZE -0.014 -0.088 -0.010 -0.091 -0.009 0.011 [0.042] [0.032] [0.032] [0.032] [0.032] [0.032] FASSETS X SOCSCORE 0.0005** 0.0005** [0.0002] [0.002] FASSETS X ENVSCORE -0.0005 -0.0001 [0.0002] [0.002] FASSETS X INVPRO -0.001 -0.001 [0.0007] [0.0009] Constant 10.019*** 10.140*** 75.392*** 70.033*** 71.514*** 71.514*** [1.293] [1.338] [3.248] [3.154] [3.915] [3.976] Country FE NO NO NO NO NO NO
Industry FE YES YES YES YES YES YES
Year FE YES YES YES YES YES YES
Adjusted R2 0.362 0.368 0.372 0.366 0.369 0,374
5. Conclusion
Corporate strategy diversification enables MNCs to enter into new markets and additionally creates new business and growth opportunities. Therefore, MNCs are associated with several financial advantages such as a more stable cash flow, greater financial stability and lower risk compared to their domestics peers. On the other hand, this geographical diversification leads MNCs to face higher costs and additionally makes communication inside and outside the company more difficult.
Thus, global diversified firms are likely to suffer from several and harmful information asymmetries. These asymmetries significantly impact firms’ performance, decision making process and finally the monitoring of the board of directors. A large amount of the existing literature has empirically shown a positive relationship between MNCs foreign operational network and asymmetric information. MNCs that operate internationally are more likely to suffer from informational frictions. In contrast, a substantial part of the literature has assumed an inverse relationship between information asymmetry and foreign involvement. Therefore, based on the contradicting findings this thesis examines the relationship between MNC’s foreign involvement and information asymmetries between managers and shareholders by considering a large sample of firms actively operating in 57 different countries. The reason is that information asymmetries can be particularly harmful for firms since they increase agency problems and eventually decrease the value of the company. Thus, it is interesting to better understand the relationship between MNCs’ foreign involvement and information asymmetries and how these asymmetries can be reduced throughout the use of CSR and investor protection.
the level of investor protection due to its important implications inside and outside of the company. The financial literature focuses mainly on the advantages and disadvantages associated with strong and poor investor protection respectively. Nevertheless, even though a large amount of the existing literature has considered investor protection and information asymmetry unrelated, I examine whether the level of investor protection plays a moderating role on the main association. The empirical analysis suggests that investor protection negatively impacts the negative relationship between information asymmetries and MNCs’ foreign involvement and therefore increases informational frictions between managers and shareholders. These findings are not in line with a large part of the existing literature which has assumed that investor protection can be used as an effective instrument to mitigate frictions between managers and shareholders.
Acknowledgements
References
Aabo, T., Pantzalis C., Park, J. C., 2015. Multinationality and Opaqueness. The Journal of Corporate Finance 30,65-84.
Anderson, R., Manst, S., Reeb, D., 2004 .Board characteristics, accounting report integrity and cost of debt.
Jounal of Accounting and Economics 37, 353-375.
Ang, J., Cheng, Y., 2011. The Endogeneity of Information Asymmetry and Corporate Financing Decisions. The
Journal of Finance Research 304, 411-440.
Ang, J., Hutton, I., Majadillas, M., 2014. Manager Divestment in Leveraged Buyouts. European Financial
Management 20, 462-493.
Barron, O.E., Sheng, X.S., Thevenot, M., 2012. The Information Environment and Cost of Capital. Working
Paper.
Bebchuk, L.A., Weisbach, M.S., 2009. The State of Corporate Governance Research. Review of Financial
Studies 23, 939-961.
Bhattacharya, U., Daouk, H., Welker, M., 2003. The World Price of Earnings Opacity. The Accounting Review 78, 641-678
Brent, W., Addo, C.K., 2012. Minimizing Information Asymmetry: Does Firm's Characteristics Matter?
Academy of Banking Studies Journal 11, 43-54.
Brick, I. E., Chidambaran, N.K.,2010. Board Meetings, Commitee Structure, and Firm Vaue. Journal of
Corporate Finance 16, 533-553.
Bushaman, R. M., Piotroski, J.D.,Smith, A.J., 2004. What Determines Corporate Transparency? Journal of
Accounting Research 42, 207-252
Bushman , R. M., Smith, A.J., 2001. Financial Accounting Information and Corporate Governance. Journal of
Accounting and Economics 32, 237-333.
Burkart, M., Gromb, D., Mueller, H., Panunzi, F., 2014. Legal Investor Protection and Takeovers . The Journal
of Finance 69, 1129-1165.
Chae, J., 2005. Trading Volume, Information Asymmetry, and Timing Information. The Journal of Finance 60, 413-442
Cho, S.Y., Lee, C., Pfeiffer R.J. 2013.Corporate Social Responsibility Performance Information and Information Asymmetry. Journal of Accounting and Public Policy 32, 71-83.
Chung, K H., Kim, J., Kim, Y., Zhang, H., 2016. Information Asymmetry and Corporate Cash Holdings. Journal
of Business Finance & Accounting 42, 1341-1377
.
Coles, J., 2006. Mangerial Incentives and Risk-Taking. Journal of Financial Economics 79, 431-468.
Cui., J., Jo, H., Na, H, 2016. Does Corporate Social Responsibility Affect Information Asymmetry? Journal of
Business ethics 3, 1-24.
Dadalt, P., Gay, G. D., Nam, J., 2002. Asymmetric Information and Corporate Derivative Use. The Journal of
DeFond, M., Hung, M., Trezevant, R., 2006. Investor protection and the information content of annual earnings announcements: International evidence. Journal of Accounting and Economics 43(1), 37-67.
Denis, D., J., Diane, K., Yost, D., Yost, K., 2002. Global Diversification, Industrial Diversification, and Firm Value. The Journal of Finance 57, 1951-1979.
Dennis, S., A., Sharpe, I., G., 2005. Firm Size Dependence in the Determinants of Bank Term Loan Maturity.
Jounal of Business Finance & Accounting 32, 31-64.
Doukas, J., Pantzalis, C., 2003.Geographic diversification and agency costs of debt of multinational firms. Jounal
of Corporate Finance 9 , 59-92.
Elbadry, B., A., Gounopolous, D., Skinner, F, 2015. Governance Quality and Information Asymmetry. Financial
Markets, Institutions & Intruments 24, 127-157.
El Ghoul, S., Guendhami, O., Kim, Y., 2017. Country-level institutions, firm value, and the role of corporate social responsibility initiatives. Journal of International Business Studies 48, 360-385.
Fosu, S., Danso, A., Coffie, W., 2016. Information Asymmetry, Leverage and Firm Value. Do crisis and growth matter? International Review of Financial Analysis 46, 140-150.
Gao, W., Chou, J., 2015. Innovation Efficiency, Global Diversification and Firm Value. The Journal of
Corporate Finance 30, 278-298.
Giofrè M., 2013. Investor protection rights and foreign investment. Journal of Comparative Economics 41, 506- 526.
Goh, B.W., Lee, J., NG, L., Ow Yong, K., 2016. The Effect of Board Independence on Information Asymmetry.
Research Collection School of Accountancy 25, 155-182.
Hansen, B., Miletkov, M, Wintoki, B., 2015. Investor Protection and the Role of Firm-Level Financial Transparency in Attracting Foreign Investment. Financial Review 50, 393-434.
Hope, K., Thomas, W., B., 2008. Managerial empire builiding and disclosure. Journal of Accounting Research
46, 591-626.
Huang, X., 2015. Thinking outside the borders: investors' underreaction to foreign operations information. The
Review of Financial Studies 28, 3109-3152.
Jang, Y., 2017. International corporate diversification and financial flexibility. The Revire of Financial Studies 30, 4133-4178.
Jensen, M., C., Meckling, W., H., 1976. Theory of the firm: Managerial behavior, agency costs and ownership structure. The Journal of Financial Economics 4 , 305-360.
John, K., Litov, L., Yeung, B., 2008. Corporate Governance and Risk-Taking. The Journal of Finance 63, 1679-1728
Kanagaretnam, K., Lobo, J., G., Whalen, D., J., 2007. Does Good Corporate Governance Reduce Information Asymmetry arounf Quaterly Earnings Announcements. Journal of Accounting and Public Policy 26, 497-522. Khanna, T., Palepu, K., G., Srinivasan, S., 2004. Disclosure practices of foreign companies interacting with U.S.
The Journal od Accounting Research 42, 475-508
Kim, C., Pantzalis, C., 2003. Global/industrial diversification and analyst herding. Financial Analyst Journal 59, 69-69.
Kim, Y., Park, M., S., Wier, B., 2012. Is earnings quality associated with corporate social responsibility?. The
La Porta, R., Lopez-De- Silane, F., Scleifer, A., Vishny, R., W., 1997. Legal determinants of external finance.
The Jounal of Finance 52, 1131-1150.
La Porta, R., Lopez-De- Silane, F., Scleifer, A., Vishny, R., W., 1998. Law and Finance. Journal of Political
economy, 106, 1113-1155.
La Porta, R., Lopez-De- Silane, F., Scleifer, A., Vishny, R., W., 2002. Investor Protection and Corporate Valuation. The Journal of Finance 57, 1147-1170.
Lambert, R., Leuz, C., Verrecchia, R., 2007. Accounting information, disclosure, and the cost of capital. Journal
of Acounting research 45, 385-420.
Larrain, B., Tapia, M., Urzua, F., 2017. Investor Proteciton and Corporate Control. Journal of Corporate Finance
47, 147-190
Liao, L., Deng, X., Wang, Y., 2003. The Effect of Investor Protection on the Information Asymmetry in a Stock Market. Social Science Research Network 20, 1-24.
Lombardo, D., Pagano, M., 2000- Law and Equity Market a Simple Model. Corporate Governance Regimes:
Convergence and Diversity 25, 343-362.
Lopatta, K., Bucholz, F., Kaspereit., T., 2015. Asymmetric information and corporate social responsibility.
Business and Society 3, 458-488.
Luo, X., Wang, H., Raithel, S., Zheng, Q. 2013. Corporate social performance, analyst stock recommendations, and firm future returns. Strategic Management Journal 36, 123.136.
Mougin, F. 2007. Asymmetric Information and legal investor protection. Economic Letters 95, 253-258. Martinez-Ferrero, J., Rodrigues-Ariza, L., Garcia-Sanchez, I., M., 2017. Corporate social responsibility disclosure and information asymmetry: the role of family ownership. Review of Mnagerial Science 4, 1-32. Masulis, R., Cong, W., Fei, X., 2003. Globalizing the boardroom—The effects of foreign directors on corporate governance and firm performance. Journal of Accounting and Economics 53, 527-554.
Park, H, Sush, J., Yeung, B., 2013. Do multinational and domestic corporations differ in their leverage policies?
The Journal of Corporate Finance 20, 115-139.
Pinkowitz, L., Stultz, R., M., Williamson, R., 2016. Do US firms hold more cash than foreign firms do?. The
Review of Research 42, 207-252.
Riaz, Z., Ray, S., Kumas, V., 2015. Disclosure practices of foreign and domestic firms in Australia. Journal of
World Business 50, 781-792
Seifert, B., Gonenc, H., 2011. Creditor Rights and R&D Expenditures. Corporate Governance: An International
Review 20, 3-20.
Semenescu, A., Curmei, C., 2015. Using CSR to mitigate information asymmetry in the banking sector.
Management and Marketing 10, 316-329.
Shleifer, A., Wolfezon, D., 2002. Investor Protection and Equity Market. Journal of Financial Economics 66, 3- 27.
Suffi, A., 2007. Information asymmetry and financing arrangements: Evidence from syndicated loans. The
Journal of Finance 67, 629-668
Vafeas, N., 1999. Board Meeting Frequency and Firm Performance. Journal of Financial Economics 53, 113-142.
Xiao, M., You, J., 2009. Private Benefits of Control, Growth Opportunities and Investor Protection. The Journal
of Accounting Research 2, 123-145.
Xiao, S., Zhao, S., 2012. How do agency problems affect firm value? Evidence from China. The European
Journal of Finance 20, 803-828.
