RESEARCH
The Journal for Decision Makers
includes research articles
that focus on the analysis and
resolution of managerial and
academic issues based on
analytical and empirical or
case research
Executive
Summary
KEY WORDS
Ownership Structure
Disclosure Quality
Ownership Concentration
Institutional Ownership
Information Asymmetry
VIKALPA • VOLUME 41 • ISSUE 1 • JANUARY-MARCH 2016
A Study of Impact of VIKALPA
41(1) 51–60
Ownership Structure © 2016 Indian Institute of
Management, Ahmedabad
SAGE Publications
and Disclosure Quality sagepub.in/home.nav
DOI: 10.1177/0256090915620876
http://vik.sagepub.com
on Information
Asymmetry in Iran
Mahmoud Mousavi Shiri, Mahdi Salehi, and Ali Radbon
Capital market uses financial information with high disclosure quality, and this infor-
mation can influence capital market decision-making. Corporate governance research
shows that ownership structure can influence financial reporting quality, and thus play
an effective role in capital market decision-making.
The main purpose of the current study is to examine the impact of ownership struc-
ture and disclosure quality on the information asymmetry phenomenon among the
listed companies on the Tehran Stock Exchange (TSE). Ownership structure (including
ownership concentration and institutional ownership) and disclosure quality (including
reliability and timeliness) are considered as independent variables, and their impact is
examined on the dependent variable (information asymmetry). Consistent with extant
literature, bid-ask spread is used as a proxy variable for information asymmetry.
The statistical results, based on data collected from 102 listed companies on the TSE
during 2007–2014, revealed positive impact of ownership structure and negative impact
of disclosure quality on information asymmetry. These results show that information
asymmetry is less in firms that published more reliable and timely information, and is
more in firms with more concentrated ownership structure, higher institutional owner-
ship, and lower disclosure quality. In other words, reliability and timeliness of informa-
tion have a positive role in stock price identification and close-up views of the buyer and
seller in TSE.
Findings of this article can assist accounting researchers and theoreticians in comparing
real world facts with hypotheses developed with respect to ownership structure, disclo-
sure quality, and information asymmetry. By increasing transparency in the capital
markets, market participants, decision-makers, financial analysts, and potential inves-
tors are aided in their analysis of plans for investments in financial assets.
51
D
isclosure is essential to market efficiency. Firms
disclose their information via legal financial
reports including financial statements, notes
to the financial statements, management discussion
and analysis, and other legal reporting systems. In
addition, some firms make voluntary disclosures such
as management forecasts and additional information
disseminated in press. Demand for financial reports
and disclosure is mainly due to information asym-
metry and agency problems between management and
external users (Jiang, Habib, & Baiding, 2011).
Information asymmetry and agency problem lead
to inefficient allocation of resources in the capital
market. Therefore, efficient contracts between agents
and principals are used to solve these problems and
increase agent’s incentive for disclosure of informa-
tion. As a result of this process, misevaluation of the
firm is reduced and conflicting interests are tuned to
be congruent. Environmental and economic factors
along with financial characteristics of companies
impede information asymmetry and agency problems
to be solved completely (Jensen & Meckling, 1976).
Accounting disclosures under uncertain (risky) situ-
ations are essential for investors. So, firms attempt to
make high-quality disclosures to attain investors’ trust
and reduce their uncertainty.
A key challenge for well-developed markets is optimal
allocation of savings to existing investment oppor-
tunities. Usually, there are many firms and entrepre-
neurs who are willing to attract resources for purposes
of applying their business ideas. While both inves-
tors and practitioners are willing to operate business
activities, matching resources to investment opportu-
nities in business sector is highly complicated for two
reasons. First, managers have a better knowledge about
the value of investment opportunities than the depos-
itors, and also, they have more incentive to overstate
the value of their firms. Therefore, investors face infor-
mation asymmetry problem when deciding on invest-
ment in firms. Second, after depositors (investors)
have invested their money in a firm, managers have an
incentive to use their investment in an inappropriate
way, so that the agency problem appears (Beyer et al.,
2010; Healy & Palepu, 2001).
Accounting information (including accounting disclo-
sures) plays important roles in well-developed capital
markets. First, accounting information enables those
providing firm’s capital (including shareholders’ and
52 A STUDY OF IMPACT OF OWNERSHIP STRUCTURE AND DISCLOSURE QUALITY ON INFORMATION ASYMMETRY IN IRAN
creditors’) to evaluate potential return for investment
opportunities (valuating or ex-ante role of accounting
information). Second, accounting information enables
those providing firm’s capital to monitor the usage of
contributed capital to the firm (stewardship or ex-post
role of accounting information). Generally, agency prob-
lems and information asymmetry constrain optimal
allocation of resources in capital markets (Beyer et al.,
2010). Accounting disclosure is a good mechanism to
facilitate safe transmission of information between
management and investors, which play an important
role in mitigating information asymmetry (Healy &
Palepu, 2001).
Capital structure is among the important factors
affecting information asymmetry and agency problem.
Some theoreticians believe that, according to active
monitoring hypothesis (Demiralp et al., 2011), exist-
ence of institutional investors among shareholders of
the firm (ownership concentration) can reduce infor-
mation asymmetry and in turn mitigate agency costs,
mainly due to the monitoring role of these types of
investors. On the other hand, based on self-interest
hypothesis (Statman, 2011), the institutional inves-
tors have more incentive to access private information
about the firm for their trading purposes. In this situ-
ation, these investors are less interested in monitoring
firm’s activities and more interested in disclosure by
the firm and, therefore, are likely to increase informa-
tion asymmetry and in turn increase agency problems
(Jiang et al., 2011).
In this backdrop, the main problem to be addressed in
this article is the impact of capital structure (including
ownership concentration and institutional ownership)
and disclosure quality (including reliability and timeli-
ness of disclosure) on information asymmetry.
LITERATURE REVIEW
Botosan (1997) found a negative relation between the
level of disclosure index and information asymmetry
among manufacturing companies with less analyst
coverage in the security market. Lang and Lundholm
(2000) argued that disclosure of corporate governance
and information about capital structure reduced infor-
mation asymmetry. So, shareholders could more effec-
tively monitor management actions.
Noravesh and Ebrahimi (2005) examined the relation-
ships between shareholder composition, information
asymmetry, and usefulness of performance measures.
Their purpose was to provide evidence on the role of
institutional investors in reducing information asym-
metry among firms listed on the Tehran Stock Exchange
(TSE). Their results showed that firms with more insti-
tutional investors provided more information about
future earnings compared to firms with less institu-
tional investors.
Beeks and Brown (2006) suggested that firms with
more concentrated ownership structure made better
accounting disclosures which reduced information
asymmetry. LaFond and Watts (2008) showed that
firms with more investment opportunities had lower
financial reporting quality and were more likely to
have lower level of accounting disclosures. Conversely,
during the finalization of investment projects, when the
firms’ potential for future growth is lower, information
asymmetry could reduce and, therefore, the quality of
financial reporting could improve.
Hasas and Bazazzadeh (2008) examined the relation
between institutional investors and firms’ value; their
findings, consistent with active monitoring hypoth-
esis, showed a significant positive relation between
the level of institutional ownership and value of the
firm. Nevertheless, their other findings, contrary to
the interest convergence hypothesis, did not prove any
significant relation between institutional ownership
concentration and value of the firm.
Khlif and Souissi (2010) found a positive relation
between profitability of the firm and information
asymmetry. Jiang et al. (2011) examined the impact of
ownership concentration and discretionary disclosure
on information asymmetry among New Zealand firms.
Their findings showed a positive impact of owner-
ship concentration along with a negative impact of
discretionary disclosure on information asymmetry.
Reeb and Zhao (2013) tested the relationships between
education, experience, and communication among
board members, disclosure quality, and information
asymmetry. Their findings prove an inverse relation
between education, experience and communication
among board members and information asymmetry.
Etamadi, Amirkhani, and Rezaei (2011) studied
the value relevance of disclosure with respect to
information asymmetry. Their study revealed that
disclosures made via financial reports had information
content about future earnings, and investors used this
information for purposes of their decision-making.
Osta (2011), in his study on relationship between
VIKALPA • VOLUME 41 • ISSUE 1 • JANUARY-MARCH 2016
ownership structure and earnings management,
suggested that differences in ownership structure
could justify earnings management. In other words, his
study showed a significant negative relation between
institutional ownership, management ownership,
and earnings management, but a significant positive
relation between company ownership and earnings
management. Rahimian, Hemati, and Soleymanifard
(2012) studied the impact of earnings quality on
information asymmetry among the firms listed on TSE.
Their study provided evidence on negative impact of
earnings quality on information asymmetry of firms.
Dai, Kong, and Wang (2013) investigated how informa-
tion asymmetry and mutual fund ownership affected
the listed companies’ earnings management. The
outcomes of the study showed that reducing informa-
tion asymmetry improved firms’ earnings management
behaviour. Further, they also found that compared to
the short-term mutual funds, the long-term mutual
funds promoted earnings quality more by adopting a
monitoring role.
Han, Jin, and Kang (2013), by measuring information
precision, observed that managerial ownership was
positively associated with financial analysts’ public and
private information precisions, largely consistent with
the alignment view of managerial equity ownership.
Kosaiyakanont (2013) examined the importance of
financial analysts as information intermediaries in
the emerging capital market of Thailand. The find-
ings provided evidence that more analysts following
a company mitigated information asymmetry among
investors and led to improved stock market liquidity in
Thailand’s emerging capital market, similar to the role
they had been found to play in developed markets.
Uyar, Kilic, and Bayyurt (2013) investigated the factors
that impacted the voluntary information disclosure
level of Turkish companies. The findings revealed an
association between the voluntary information disclo-
sure level and the variables such as firm size, auditing
firm size, proportion of independent directors on the
board, institutional/corporate ownership, and corpo-
rate governance.
Niléhn and Thoresson (2014, p. 47) studied the variables
affecting the extent of corporate voluntary information
in Sweden. The findings showed asymmetric
information and agency costs as important determinants
of the extent of strategic corporate information, that is,
53
voluntary information, in Swedish companies. Larger
firms seemed to reduce agency costs and narrowed
the information asymmetry by increasing the level of
information disclosed.
Ali (2014) investigated the impact of ownership struc-
ture on corporate voluntary disclosure in Tunisia. The
results showed that the level of voluntary disclosure
was negatively significantly related to the blockholder
ownership and family ownership, while it was posi-
tively related to the proportion of institutional investor
ownership and firm performance.
Boubaker, Hamrouni, and Liang (2015) examined the
relative performance of several corporate governance
factors, specifically the characteristics of board of direc-
tors, managerial ownership, and voluntary disclosure,
in improving firm information environments based
on a B-convex method on a sample of 70 non-financial
French-listed firms, belonging to the SBF 120 index.
The results of the study showed that 68.57 per cent of
the sample firms were located on the efficiency fron-
tier. Corporate governance practices appeared to serve
as effective monitoring for the top executives of these
firms, which reduced information asymmetry between
insiders and outsiders, thereby improving the informa-
tion environment.
Satta, Parola, Profumo, and Penco (2015) studied the
explanatory power of corporate governance issues,
such as ownership structure and board composition, as
potential determinants of communication quality. The
results showed that a diffuse ownership along with
the existence of an audit committee was associated
with increased qualitative levels of voluntary disclo-
sure, while managerial ownership, board size, and the
number of board committees presented a negative rela-
tion to disclosure. Moreover, institutional investors’
ownership and the presence of independent directors
were not related to disclosure quality.
Albawwat and Yazis Ali Basah (2015) studied the rela-
tionship between characteristics of corporate govern-
ance and structure of ownership on voluntary disclo-
sure in interim financial reports during 2009–2013. A
substantial degree of voluntary disclosure was demon-
strated in high-level corporate governance awareness
and implementation in Jordan. Specifically, the factors
of board compensation, audit firm size, and govern-
ment ownership significantly impacted voluntary
disclosure.
54 A STUDY OF IMPACT OF OWNERSHIP STRUCTURE AND DISCLOSURE QUALITY ON INFORMATION ASYMMETRY IN IRAN
HYPOTHESES DEVELOPMENT
Agency problems and information asymmetry limit
optimal allocation of resources in capital markets
(Beyer et al., 2010). Accounting disclosure is a mech-
anism which facilitates safe transmission of informa-
tion between management and investors, and plays an
important role in mitigating information asymmetry
(Healy & Palepu, 2001). Based on these concepts, the
first and second hypotheses are developed as follows:
H1: There is a significant relation between timeliness of
disclosures and information asymmetry.
H2: There is a significant relation between reliability of
disclosures and information asymmetry.
According to the active monitoring hypothesis, exist-
ence of institutional investors and major investors
among shareholders of the firm (ownership concen-
tration) can reduce information asymmetry and in
turn mitigate agency costs, mainly due to the moni-
toring role of these investors. On the other hand, based
on self-interest hypothesis, institutional investors and
major investors have more incentive for accessing
private information about the firm for their trading
purposes. In this situation, these investors are less inter-
ested in monitoring firm’s activities and more inter-
ested in disclosure by the firm and, therefore, are likely
to increase information asymmetry and in turn increase
agency problems (Jiang et al., 2011). Based on this, the
third and fourth hypotheses are as follows:
H3: There is a significant relation between ownership
concentration and information asymmetry.
H4: There is a significant relation between institutional
ownership and information asymmetry.
METHODOLOGY
The current study is considered as a semi-experimental
study. An inductive method was applied on the ex-post
data (using historical data), and correlation analysis
was used for the statistical analysis. The initial sample
included data from all the firms listed on TSE during
the years 2007–2014. The firms that did not meet any of
the following conditions were omitted:
• Availability of necessary data for measuring the
variables
• Listed at least from 2006 on TSE, and continued to
be listed till 2014.
• Fiscal year ended March 21 every year (end of
calendar year in Iran).
• Did not operate as financial intermediaries.
Considering the above conditions, the final sample
included 102 firms (510 firm-years). The required data
for the study were collected using Iranian databases
including Rahavard Novin, firms’ prospectuses, and
their audited financial statements. The statistical anal-
ysis used EViews and SPSS software, and the hypoth-
eses were tested using t-student statistic at the signifi-
cance level of 95 per cent.
THE MODEL
Following Jiang et al. (2011), the first and second
hypotheses were tested using Model 1:
Model 1
SPREAD it = β0 + β1Timeliness it + β2Reliability it +β3Size
it + β4Trading volume it + β5Stock price it + εi,t
Consistent with Jiang et al. (2011), the following regres-
sion model was used for testing the third and fourth
hypotheses:
Model 2
SPREAD it = β0 + β1Concentration it + β2Insown it +β3Size
it + β4Trading volume it + β5Stock price it + εi,t
Dependent Variable
SPREAD = information asymmetry measured as
bid-ask spread for firm i in year t.
Independent Variables
Timeliness = proxy variable for measurement of timeli-
ness of disclosures.
In this article, timeliness of disclosures was measured
using corporate disclosure scores published by the
Iranian Securities and Exchange Committee (SEC).
Information dissemination scores for the firms were
VIKALPA • VOLUME 41 • ISSUE 1 • JANUARY-MARCH 2016
calculated based on their reporting characteristics such
as reliability and timeliness of their reporting.
Reliability = proxy variable for measurement of relia-
bility of disclosures.
In this article, reliability of disclosures was measured
using corporate disclosure scores published by the
Iranian SEC. Information dissemination scores for the
firms were calculated based on their reporting char-
acteristics such as reliability and timeliness of their
reporting.
Concentration = proxy variable for ownership concentra-
tion. By ownership concentration, we mean percentage
of shares owed by main owners. Shareholders owning
more than 5 per cent of all outstanding shares at the
end of the year were classified as the main owners.
InsOwn = percentage of shares held by governmental
organizations and other public companies.
Control Variables
Size = measured as logarithm of total assets at the end
of the year.
Trading volume = measured as total number of shares
traded during the year.
Stock price = measured as closing price of firm’s stock
at the year end,
FINDINGS
Descriptive Statistics
Descriptive statistics of independent, dependent,
and control variables for data from the 102 sample
firms, including mean, median, standard deviation,
minimum, and maximum are presented in Table 1.
Determination of an Appropriate Model for
Regression Estimation
Chaw Test
Results from F-test for regression models used in this
study are shown in Table 2.
55
Table 1: Descriptive Statistics

Variables Mean Median Standard Deviation Min Max

SPREAD Proxy for information asymmetry 6.231 6.012 3.481 0.018 11.351
Concentration Ownership concentration 0.612 0.635 0.701 0.171 0.883
Insown Institutional ownership 0.531 0.522 0.154 0.0914 0.559
Timeliness Proxy for disclosure quality 61.245 60.885 17.356 34.540 89.425
Reliability Proxy for disclosure quality 63.565 62.658 19.235 21.412 95.836
Size Firm size 14.665 14.421 1.335 10.664 19.951
Trading volume Trading volume 36.336 37.775 23.013 19.115 73.005
Stock price Stock price 59.335 61.155 38.684 1.435 114.365

Source: Authors’ Analysis.

Table 2: Chaw Test for Regression Models hypothesis, arguing that random effect estimation is
inconsistent.
Regression Models F Statistic p-value Test Results
Significance
The results from Hausman test for Model 1 used to test
Model 1—for testing 1st 78.736** 0.000 Null the first and second hypotheses are presented in Table 3.
and 2nd hypotheses hypothesis is
rejected
The Hausman test output shows that X2 statistic for
the said model equals to 122.651, which is significant
Model 2—for testing 1.331 0.248 Null
3rd and 4th hypotheses hypothesis is at 5 per cent level, and leads to the disapproval of null
accepted hypothesis; thus, considering this result, panel data
with fixed effects was used for the estimation of Model
Source: Authors’ Analysis.
1 to test the first and second hypotheses.
Note. ** denotes significance level of 5%.
Table 3: Hausman Test Results
For Model 1 used to test the first and second hypotheses,
considering the significance of Chaw’s test results, null Regression Model X2 Statistics p-value Test Results
hypothesis (which says that using pool model is more Model 1—for testing 1st 122.651** 0.000 Null hypothesis
appropriate) is rejected. In other words, due to existing and 2nd hypotheses is rejected
singular or group effects, panel data method should be Source: Authors’ Analysis.
used for regression estimation. In the following section,
Note. ** significance level of 5%.
results of Hausman test to determine whether the panel
data is random effect or fixed effect are described.
Testing Classic Assumptions for Regression
For Model 2 used to test the third and fourth hypoth- Estimation
eses, considering the significance of Chaw’s test results, Before the estimation of any regression model, the
null hypothesis (which says that using pool model is classic assumptions behind the linear regression models
more appropriate) is accepted. In other words, since were tested. These tests and their results are discussed
there are no singular or group effects, pool data method in the next section.
should be used for regression estimation so that there is
no need to perform Hausman test.
Normality of Independent Variable Distribution

Hausman Test The Kolmogorov–Smirnov test was used to determine

After constants are determined (not to be the same for
different years), there is a need to find an appropriate
method (fixed effects or random effects) for regression
estimation purposes. In this article, Hausman test
was used to test the null hypothesis, that is, random
effect estimation is consistent against alternative
whether the distribution of independent variables was
normal, results of which are presented in Table 4. Since
the significance level calculated in the Kolmogorov–
Smirnov test is more than 5 per cent (0.586), as presented
in Table 4, null hypothesis for this test is rejected and,
therefore, we can conclude that the distribution of
SPREAD (independent variable) is normal.

56 A STUDY OF IMPACT OF OWNERSHIP STRUCTURE AND DISCLOSURE QUALITY ON INFORMATION ASYMMETRY IN IRAN
Table 4: One-Sample Kolmogorov–Smirnov Test Results in Table 6. As shown in Table 6, F-statistic for Model
1 is 10.541 which proves that goodness of fit for this
Dependent Variable P-value Test Result
model is of appropriate level. Also, estimated R-square
Proxy for information Distribution is and adjusted R-square for Model 1 are 53.5 per cent and
SPREAD 0.336
asymmetry normal
51.1 per cent, respectively. Based on this, therefore, it
Source: Authors’ Analysis. can be concluded that explanatory variables used in the
regression Model 1 can explain only 53.5 per cent of the
changes in information asymmetry.
Residuals’ Autocorrelation
The Durbin–Watson statistic was used to test the pres-
Table 6: Regression Estimation Results for Model 1
ence of autocorrelation in the residuals. This statistic
is generally used to test the following hypotheses in SPREADit = β0 + β1 Timeliness it + β2Reliability it + β3Size it +
this respect: β4Trading volume it + β5Stock price it + εi,t
Variables Multiplier Standardized t-statistic Significance
H0 = There is no significant autocorrelation in the residuals Beta
Constant β0 6.254 3.110 0.006
H1 = There is a significant autocorrelation in the residuals Timeliness β1 –6.365 –2.822 0.016
Reliability β2 –3.682 –3.012 0.0027
If the Durbin–Watson statistic is between 1.5 and 2.5, Size β3 5.054 2.981 0.005
then the null hypothesis (no autocorrelation between Trading β4 5.447 2.022 0.038
residuals) is accepted; else, the alternative hypothesis volume
is accepted. Stock price β5 4.332 2.137 0.018
R-square 0.535 F-statistic 10.541
Durbin–Watson statistic, R-square, and adjusted Adjusted P-value 0.000
R-square for both the models used in this article are R-square 0.511
Durbin–Watson 1.821
shown in Table 5.
Source: Authors’ Analysis.

It should be noted that the positive (negative) sign of

Table 5: Testing Autocorrelation between Residuals
figures presented in Standardized Beta column shows
Adjusted the direct (reverse) impact of each variable on informa-
Regression Model R-square Durbin-Watson
R-Square tion asymmetry of the sample firms.
Model 1—for testing 1st
0.535 0.511 1.821
and 2nd hypotheses H1: There is a significant relation between timeliness of
Model 2—for testing 3rd disclosures and information asymmetry.
0.578 0.544 1.905
and 4th hypotheses

Source: Authors’ Analysis.

As shown in Table 5, Durbin–Watson statistic for both
the models is between 1.5 and 2.5. Therefore, the null
hypothesis, that there is no significant autocorrelation
in the residuals, is accepted.
After testing the classic assumptions for regression
models, the results from the estimation of the regres-
sion models and the test of the main research hypoth-
eses are discussed in the following section.
As shown in Table 6, timeliness of disclosures is signifi-
cant at 5 per cent (sig. = 0.016); also, the absolute value
of t-student statistic for this variable is –2.822, which
proves that it is significant at 5 per cent level. Therefore,
at 95 per cent level of confidence, the first research
hypothesis that there is a significant relation between
timeliness of disclosures and information asymmetry is
accepted.
H2: There is a significant relation between reliability of
disclosures and information asymmetry.

As shown in Table 6, reliability of disclosures is signif-

Testing Research Hypotheses icant at 5 per cent (sig. = 0.0027); also, the absolute
The results of estimation of regression Model 1 used value of t-student statistic for this variable is –3.012,
to test the first and second hypotheses are presented which proves that it is significant at 5 per cent level.

VIKALPA • VOLUME 41 • ISSUE 1 • JANUARY-MARCH 2016 57

Therefore, at 95 per cent level of confidence, the second
research hypothesis, that there is a significant relation
between reliability of disclosures and information
asymmetry, is accepted.
Results from the estimation of regression Model 2 used
to test the third and fourth hypotheses are presented
in Table 7. As shown in this table, F-statistic for Model
2 is 16.511, which proves that goodness of fit for this
model is of appropriate level. Also, estimated R-square
and adjusted R-square for Model 1 are 57.8 per cent and
54.4 per cent, respectively. Based on this, therefore, it
can be concluded that explanatory variables used in
the regression Model 2 can explain only 57.8 per cent
of the changes in information asymmetry. It should be
noted that positive (negative) sign of figures presented
in Standardized Beta column shows the direct (reverse)
impact of each of the variables on information asym-
metry of the sample firms.
Table 7: Regression Estimation Results for Model (2)
SPREAD it = β0 + β1 Concentration it + β2Insownit + β3 Sizeit
+ β4Trading volume it + β5Stock price it + εi,t
at 5 per cent level. Therefore, at 95 per cent level of
confidence, the third research hypothesis that there is
a significant relation between ownership concentration
and information asymmetry is accepted. Moreover,
positive sign of standardized beta estimated for owner-
ship concentration (4.258) in the regression Model 2 can
be considered as its positive (direct) impact on informa-
tion asymmetry.
H4: There is a significant relation between institutional
ownership and information asymmetry.
As shown in Table 7, institutional ownership is signifi-
cant at 5 per cent (sig. = 0.000); also, the absolute value
of t-student statistic for this variable (6.445) is higher
than the relative value from t-student table at the same
degree of freedom, which proves that it is significant
at 5 per cent level. Therefore, at 95 per cent level of
confidence, the fourth research hypothesis that there is
a significant relation between institutional ownership
and information asymmetry is accepted. Moreover, the
positive sign of standardized beta estimated for institu-
tional ownership (3.445) in the regression Model 2 can
be considered as its positive (direct) impact on informa-
tion asymmetry.

Standardized
Variables Multiplier t-statistic Significance
Beta
CONCLUSION
Constant β0 4.315 2.998 0.003 Accounting information (including accounting disclo-
Concentration β1 4.258 5.215 0.000 sures) plays an important role in well-developed
capital markets. First, accounting information enables
Insown β2 3.445 6.445 0.000 those providing firm’s capital (including shareholders
Size β3 1.995 5.356 0.000 and creditors) to evaluate potential return for invest-
ment opportunities (valuating or ex-ante role of
Trading
β4 4.035 3.311 0.002 accounting information). Second, accounting informa-
volume
tion enables those providing firm’s capital to monitor
Stock price β5 3.412 2.654 0.011
usage of contributed capital to the firm (stewardship
R-square 0.578 F-statistic 16.511 or ex-post role of accounting information). Generally,
agency problems and information asymmetry constrain
Adjusted P-value 0.000 optimal allocation of resources in capital markets
0.544
R-square (Beyer et al., 2010). Accounting disclosure is a good
Durbin–Watson 1.905
mechanism to facilitate safe transmission of informa-
Source: Authors’ Analysis. tion between management and investors, which plays
an important role in mitigating information asymmetry
H3: There is a significant relation between ownership (Healy & Palepu, 2001).
concentration and information asymmetry.
Capital structure is among the important factors
As shown in Table 7, ownership concentration is signif- affecting information asymmetry and agency problem.
icant at 5 per cent (sig. = 0.000); also, the absolute value Some theoreticians believe that according to active
of t-student statistic for this variable (5.215) is higher monitoring hypothesis, existence of institutional inves-
than the relative value from t-student table at the same tors and main investors among shareholders of the
degree of freedom, which proves that it is significant firm (ownership concentration) can reduce information

58 A STUDY OF IMPACT OF OWNERSHIP STRUCTURE AND DISCLOSURE QUALITY ON INFORMATION ASYMMETRY IN IRAN
asymmetry and in turn mitigate agency costs, mainly
due to the monitoring role of these types of investors.
On the other hand, based on self-interest hypothesis,
institutional investors and main investors have more
incentive to access private information about the firm
for their trading purposes. In this situation, these inves-
tors are less interested in monitoring firm’s activities and
more interested in disclosure by the firm, and, therefore,
are likely to increase information asymmetry, in turn
increasing the agency problems (Jiang et al., 2011).
Statistical results derived from the analysis of data from
102 selected firms during the period 2007–2014 show
positive (direct) and negative (reverse) impacts of
ownership structure and disclosure quality on informa-
tion asymmetry, respectively. These findings suggest
that information asymmetry is more in firms which
have major investors, higher level of institutional
ownership, and lower disclosure quality compared to
other firms. Overall, the findings are consistent with
the self-interest hypothesis.
REFERENCES
Albawwat, A., & Yazis Ali Basah, M. (2015). Corporate
governance and voluntary disclosure of interim financial
reporting in Jordan. Journal of Public Administration and
Governance, 5(2), 100–126.
Ali, A. (2014). Ownership structure and voluntary disclo-
sure level in emerging market: Evidence from Tunisia.
Proceedings of the International Conference on Innovation &
Engineering Management, San Juan, USA, 130–140.
Beeks, W., & Brown, P. (2006). Do better-governed Australian
firms make more information disclosures? Journal of
Business Finance and Accounting, 33(3–4), 422–450.
Beyer, A., Cohen, D., Lys, T., & Walther, B. (2010). The financial
reporting environment: Review of the recent literature.
Journal of Accounting and Economics, 50(2–3), 296–343.
Botosan, C. (1997). Disclosure level and the cost of equity
capital. The Accounting Review, 72(3), 323–349.
Boubaker, S., Hamrouni, A., & Liang, Q. (2015). Corporate
governance, voluntary disclosure, and firm information
environment. Journal of Applied Business Research, 31(1),
89–101.
Dai, Y., Kong, D., & Wang, L. (2013). Information asymmetry,
mutual funds and earnings management: Evidence from
China. China Journal of Accounting Research, 6(3), 187–209.
Demiralp, I., D’Mello, R., Schlingemann, D. F., &
Subramaniam, V. (2011). Are there monitoring benefits to
institutional ownership? Evidence from seasoned equity
offerings. Journal of Corporate Finance, 17(5), 1340–1359.
VIKALPA • VOLUME 41 • ISSUE 1 • JANUARY-MARCH 2016
Etamadi, H., Amirkhani, K., & Rezaei, M. (2011). Information
content of mandatory disclosure: Evidence from firms
listed on Tehran Stock Exchange. Quarterly Journal of
Securities Exchange, 13, 235–252. [In Persian].
Han, S., Jin, J., & Kang, T. (2013). Managerial ownership and
financial analysts’ information environment. Journal of
Business Finance & Accounting, 41(3–4), 328–362.
Hasas, Y. Y., & Bazazzadeh, H. (2008). Impact of disclosure
on cost of capital. Journal of Finance Research, 8, 83–103.
[In Persian].
Healy, P., & Palepu, K. (2001). Information asymmetry, corpo-
rate disclosure, and the capital markets: A review of
empirical disclosure literature. Journal of Accounting and
Economics, 31, 485–520.
Jensen, M., & Meckling, W. (1976). Theory of the firm:
Managerial behavior, agency costs, and ownership struc-
ture. Journal of Financial Economics, 3(4), 305–360.
Jiang, H., Habib, A., & Baiding, H. (2011). Ownership concen-
tration, voluntary disclosures and information asym-
metry in New Zealand. The British Accounting Review,
43(1), 39–53.
Khlif, H., & Souissi, M. (2010). The determinants of corpo-
rate disclosure: A meta-analysis. International Journal of
Accounting and Information Management, 18(3), 198–199.
Kosaiyakanont, A. (2013). The association between corporate
disclosure, analysts following and information asym-
metry: Evidence from SET 100 Index. Global Review of
Accounting and Finance, 4(1), 13–26.
LaFond, W., & Watts, R. (2008). The information role of
conservatism. The Accounting Review, 83(2), 447–478.
Lang, M., & Lundholm, R. (2000). Voluntary disclosure during
equity offerings: Reducing information asymmetry or
hyping the stock? Contemporary Accounting Research,
17(4), 623–662.
Niléhn, P., & Thoresson, A. (2014, August). Determinants of
voluntary disclosure in Swedish corporate annual reports
(Master’s thesis). Uppsala University, 47 pages.
Noravesh, I., & Ebrahimi, A. (2005). An examination of the
relationship between information asymmetry and corpo-
rate governance. The Iranian Journal of Accounting and
Auditing Review, 12, 42–58. [In Persian].
Osta, A. (2011). The relation between quality (reliability and
timeliness) of disclosure and earnings management. The
Iranian Journal of Accounting and Auditing Review, 18, 21–35.
Rahimian, N., Hemati, H., & Soleymanifard, M. (2012).
An investigation of the relationship between earn-
ings quality and information asymmetry among firms
listed on Tehran Stock Exchange. Journal of Accounting
Knowledge, 3(11), 157–181. [In Persian].
Reeb, David M., & Zhao, W. (2013). Director capital and
corporate disclosure quality. Journal of Accounting and
Public Policy, 32(4), 191–212.
59
Satta, G., Parola, F., Profumo, G., & Penco, L. (2015). Corporate
governance and the quality of voluntary disclosure:
Evidence from medium-sized listed firms. International
Journal of Disclosure and Governance, 12, 144–166.
doi:10.1057/jdg.2013.34
Mahmoud Mousavi Shiri is an Associate Professor of
Accounting at the Department of Accounting, Payame Noor
University, Tehran, Iran. He has published more than 35 papers
in international refereed journals and 32 papers in national
journals. His areas of interest include financial reporting,
accounting theory, and current issues in accounting.
e-mail: mousavi1397@yahoo.com
Mahdi Salehi is a faculty member in the Accounting
Department at the Ferdowsi University of Mashhad, Mashhad,
60 A STUDY OF IMPACT OF OWNERSHIP STRUCTURE AND DISCLOSURE QUALITY ON INFORMATION ASYMMETRY IN IRAN
Statman, Meir (2011). Efficient markets in crisis. Journal of
Investment Management, 9(2), 4–13.
Uyar, A., Kilic, M., & Bayyurt, N. (2013). Association between
firm characteristics and corporate voluntary disclo-
sure: Evidence from Turkish listed companies. Intangible
Capital, 9(4), 1080–1112.
Iran. He has published several papers in national and interna-
tional refereed journals. His areas of interest include capital
market, financial reporting, and audit expectation gap.
e-mail: Mehdi.salehi@um.ac.ir
Ali Radbon obtained his MA in Accounting from the Gheshm
Branch, Payame Noor University, Iran. His areas of interest
include capital market and finance.
e-mail: A.radbon@yahoo.com