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http://dx.doi.org/10.14400/JDC.2021.19.3.127

Long Term Performance of Firm with Capital Investment for New Office Construction and Information Asymmetry  

Lee, Jin-Hwon (Division of Business Administration, Osan University)
Lee, Po-Sang (Dept. of Finance & Tax Management, Songwon University)
Publication Information
Journal of Digital Convergence / v.19, no.3, 2021 , pp. 127-135 More about this Journal
Abstract
We analyze the information asymmetry in the capital market by examining the long-term performance by the insider's trading behavior in the companies that made investment announcements for the construction of the new office building. The results are summarized as follows. On average, the long-term abnormal returns on share prices of sample firms represent a significant positive value. The regression analysis confirmed that there is a statistically significant positive correlation between the factor of the change in equity of large shareholders and the long-term performance. On the other hand, negative correlation was observed between change in equity of small individual investors and long-term performance. These results mean that an insider can determine the authenticity of a manager's private intention. In other words, it supports that the insider is in a position of information superiority. In addition, it is expected to provide practical usefulness to investors in that the change in equity can be used as a predictor of long-term performance.
Keywords
Information Asymmetry; Insider; Disclosure; Long-term Performance; New Office;
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