Insider Ownership and Industrial Competition: Causes and Consequences of Information Asymmetry (Report‪)‬

I. Introduction The issues of corporate governance stem from the problem of information asymmetry, when agents have the information that other external shareholders do not have. The problem prevails between the managerial (Jensen and Meckling 1976) or controlling large shareholders (Shleifer and Vishney 1997) and other external and minority shareholders. Recent research shows that information asymmetry affects corporate governance (Chung et al. 2010) while Guadalupe and Perez-Gonzalez (2006) proved that improved information can reduce agency costs and produce a more accurate relative performance evaluation.