The effect of Information Asymmetry on the Level of Cash Holding and its Reflection on Firm Value (Field Study)

Document Type : Original Article

Authors

1 Department of Accounting and Auditing , Higher Institute of Administrative Sciences in Belbeis ,Sharqia

2 Department of Accounting and Auditing , Faculty of Commerce ,Benha University

Abstract

Research objective: To determine the impact of information asymmetry on the level of cash holding and its reflection on firm value: Field Study.
Design and Methodology: The field study was conducted on a sample consisting of (420) individuals, including faculty members and their assistants, accountants and certified auditors, relied on a range of statistical methods to test the validity of the study hypotheses.
Results and Recommendations: The results of this research indicate a direct relationship between information asymmetry and the level of cash holding, and an inverse relationship between information asymmetry and firm value. On the basis of this, the researchers recommend that the need to enact laws that impose deterrent penalties on company managers if they publish private information or refrain from publishing correct information to mislead the company’s stakeholders, and the need to encourage all companies’ stakeholders to deal with financial analysts to follow up the company’s activities and provide them with current information, which may reduce information asymmetry, and the need for the Financial Supervision Authority to guide companies that cash holding must be at a level that achieves a balance between the benefits of cash holding and the costs associated with that, including agency costs, in a way that preserves the firm’s value.

Keywords

Benha Journal of Humanities Sciences
Volume 3, Issue 2
March and April 2024
Pages 1-25

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