Information asymmetry and the effect of financial openness on firm growth and wage in emerging markets

Haehean Park, Po-sang Lee and Yun W. Park

International Review of Economics & Finance, 2020, vol. 69, issue C, 901-916

Abstract: We examine whether the effect of financial openness on firm growth and wages depends on information asymmetry faced by foreign investors. We conduct a firm-year level panel regression analysis using 25 emerging market country panels for 1990–2011. We find that financial openness favors firms with lower information asymmetry (larger firms, cross-listed firms, export intensive firms), which grow faster than firms with higher information asymmetry. Further, financial openness leads to a widened wage difference between large and small firms. Finally, the asymmetric growth of large firms relative to small firms disappears as the information environment of the host country improves.

Keywords: Financial openness; Emerging markets; Firm growth; Information asymmetry; Wage inequality (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:69:y:2020:i:c:p:901-916

DOI: 10.1016/j.iref.2020.06.004

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