The Impact of Information Asymmetry on Investment Efficiency: The Role of Diversification in Major Shareholders' Portfolios
Quarterly Journal of Securities Exchange

Quarterly Journal of Securities Exchange

The Impact of Information Asymmetry on Investment Efficiency: The Role of Diversification in Major Shareholders' Portfolios

Document Type : Original Article

Authors
1 PHD student in Financial Engineering, Semnan University, Semnan, Iran
2 Department of Accounting, Faculty of Economics, Management and Administrative Sciences, Semnan University, Semnan, Iran.
3 Assistant Professor, Accounting Department,, Faculty of Economics, Management,and Administrative Sciences, Semnan University, Semnan, Iran.
Abstract
Purpose: The purpose of this study is to examine the effect of information asymmetry on corporate investment efficiency and to investigate the moderating role of major shareholders’ portfolio diversification in this relationship. Given the critical role of investment efficiency in firm value creation, this study focuses on informational and ownership-related mechanisms affecting investment decisions.
Methodology: This applied research employs a panel data approach. The sample consists of 130 non-financial firms listed on the Tehran Stock Exchange over the period 2015–2024. Linear and nonlinear regression models are estimated using the EGLS method to test the proposed hypotheses.
Findings: The results indicate that information asymmetry has a negative and statistically significant effect on investment efficiency. Moreover, major shareholders’ portfolio diversification intensifies this negative relationship. Nonlinear estimations provide no significant evidence of a nonlinear effect. Conclusion: Information asymmetry plays a crucial role in reducing investment efficiency, and higher diversification among major shareholders weakens monitoring effectiveness, thereby exacerbating investment inefficiency.
Contribution to Knowledge: This study contributes to the literature by providing novel evidence on the joint effects of information asymmetry and ownership structure on investment efficiency in an emerging market context.
Keywords
Subjects

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