Information Rating and Corporate Finance

• Main Authors: Kung-Cheng Ho, 何恭政
• Other Authors: Shih-Cheng Lee
• Format: Others
• Language: en_US
• Online Access: http://ndltd.ncl.edu.tw/handle/83y7gc

博士 === 元智大學 === 管理學院博士班 === 103 === Essay One I examine the impact of information asymmetry on a firm’s capital structure decisions with a unique information rating scheme that draws from 114 measures over five dimensions of information disclosures on each firm from 2006 to 2012. I find that high (low) information ratings are related to lower (high) debt financing and leverage. In particular, a firm that moves from the lowest to the highest information rating experiences a 7.8% reduction in firm leverage on average. This relationship is robust to a number of firm-specific factors and agency-based measures. My results suggest that information asymmetry is influential in a firm’s pecking order behavior independent of the effect of incentive conflicts. Essay Two This study examines whether information disclosures are associated with firm value under different levels of product market competition. Using a unique information rating scheme that draws from 114 measures over five dimensions of information disclosure for Taiwanese firms from 2005 to 2011, I find that firms with higher levels of information disclosure (better information transparency) are related to higher Tobin’s Q. I also find that the levels of information disclosure and product market competition interact in affecting firm value. This relationship is robust after controlling for a number of firm-specific factors and agency-based measures. My paper brings two streams of research that aim to explain the variation in firms’ value together, and suggests that information disclosure and product market competition complement each other in affecting firm value.