The Effects of Blockholding's Interlocking Directorates and Corporate Policies on Information Asymmetry

Dayang Nur Fa’izah, Abang Ahad and Josephine Yau, Tan Hwang (2024) The Effects of Blockholding's Interlocking Directorates and Corporate Policies on Information Asymmetry. International Journal of Academic Research in Accounting, Finance and Management Sciences, 14 (3). pp. 253-276. ISSN 2225-8329

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Abstract

This study investigates the influence of blockholding interlocking directorates on information asymmetry within Malaysian listed firms, a crucial aspect of corporate governance. Understanding the interactions between ownership structures, corporate policies, and information asymmetry is essential for enhancing transparency in emerging markets. Data from the top 100 companies on Bursa Malaysia, spanning 2010 to 2018, were analyzed using a robust econometric approach. The findings reveal that blockholding interlocks are negatively related to information asymmetry, suggesting they help reduce information opacity. In contrast, institutional ownership shows a positive and significant relationship with information asymmetry, while managerial and individual ownership exhibit negative but insignificant relationships. Additionally, investment policy is positively linked to information asymmetry, whereas financing and payout policies show negative but insignificant relationships. These results underscore the varying impacts of ownership types and corporate policies on information asymmetry, providing insights into how corporate governance practices can enhance transparency. Future research could explore other governance mechanisms and different market conditions to expand on these findings.

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