The Effect of Corporate Board Characteristics on Information Asymmetry: Case of the Iranian Listed Firms

The purpose of this study is to provide empirical evidence on the impact of Corporate board Characteristics on bid-ask spread, as a measure of information asymmetry, in Iranian listed firms. Using three different attributes of corporate board including board ownership, board independence and CEO duality and based on a sample of 90 nonfinancial Iranian listed firms from 2005 to 2010, the results reveal that bid-ask spread is negatively related to board ownership and the proportion of independent directors on the board. the paper also finds that the presence of CEO duality on the board is associated with higher bid-ask spread. Overall, this study provides evidence that firms with effective board of directors are associated with less information asymmetry between management and shareholders, a finding which is consistent with prior research.

Board Ownership, Board Independence, CEO Duality, Bid-Ask Spread