A Research On The Information Asymmetry Impacts Of Corporate Governance

Jensen and Meckling (1976) clearly pointed out that a key reason for the agency problemis the information asymmetry between the principal and trustee. In order to solve the problem,corporate governance emerged, including external governance mechanisms such as legal orpolitical mean, product market competition, manager market, competition market for thecontrol right, and internal governance mechanisms such as ownership structure designing,board governance, management incentive mechanisms, debt financing and so on.Based on the analysis of the corporate governance theory, this article mainly study therelationship between ownership structure, board structure and asymmetric information,applying financial market microstructure theory to measure information asymmetry inChinese market. Ownership structure will focus on ownership concentration, ownershipcounter balance, whether the company is state-controlled, foreign ownership, and furtheranalysis will focus on foreign shareholders’ nature and how the foreign shareholders holdtheir shares. Board governance will focus on the board scale, board independence, whetherchairman and general manager be the same person. The following conclusions are mainlymade from the empirical research in this article: The larger the largest shareholder’s equityis, the more serious the information asymmetry is; The larger the counterbalance equity is,the more serious the information asymmetry is; Foreign shareholders’ holdings andinformation asymmetry have an inverted U-shaped relationship, also, the effect of foreignshareholders are mainly made by foreign financial institutions and foreign shareholders whohold the stocks indirectly; Compared to the size of the board, whether the chairman and thegeneral manager is the same person, board independence have a more significant impact oninformation asymmetry.