WPŁYW ASYMETRII INFORMACJI NA DECYZJE FINANSOWE PRZEDSIĘBIORSTW
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Date
2005
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Wydział Prawa i Administracji UAM
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THE INFLUENCE OF INFORMATION ASYMMETRY ON FINANCIAL DECISIONS OF CORPORATIONS
Abstract
The article deals with the information asymmetry in the capital structure decisions of a corporation.
Such an information asymmetry exists between different groups of stakeholders. Because
the interests of those groups are connected with the financing of a company (managers on the one
hand, owners and creditors on the other) a thesis may be put forward that an information asymmetry
interferes with the financial decision making process. The consequences of the information
asymmetry can be divided into two groups: direct and indirect ones. Direct consequences are the
deviations from the optimal investment programme. There are two types of such deviations:
underinvestment, meaning a rejection of the positive NPV investments and overinvestment,
meaning an implementation of negative NPV investments. The stakeholders' action to minimise
the consequences of the information asymmetry can be defined as indirect consequences. The most
important indirect consequences include: asset substitution, i.e. replacement of safe assets with
riskier ones, signalling, i.e. use of the capital structure to advise outsiders on the true situation of
the corporation and creation of capital sources hierarchy to minimise the direct consequences of
the information asymmetry. The information asymmetry nowadays, despite the development of
technical possibilities of information transfer, has become a more serious problem leading, in a micro
scale, to a decrease in the market value of the corporation and, in a macro scale, to the reduction
of the effectiveness of capital allocation.
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Citation
Ruch Prawniczy, Ekonomiczny i Socjologiczny 67, 2005, z. 3, s. 151-160
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0035-9629