EFFECTS OF INFORMATION ASYMMETRY BETWEEN INVESTORS ON THE FINANCIAL PERFORMANCE OF COMPANIES

The present study analyzed the information asymmetry between majority or control investors and minority or external investors in light of the postulates of the Asymmetric Information Theory. It was hypothesized that this phenomenon leads minority investors, feeling the uncertainty inherent to their information disadvantage, to demand higher returns as collateral. A structural equation model was proposed, under the partial least squares approach, to study the relationship between the asymmetry of information between investors and the financial performance of companies. It was verified whether a more significant presence of the phenomenon produces increases in return measures such as ROA and ROE. Quarterly data from the companies that make up the General Index of the Colombian Stock Exchange-IGBC- were used between 2012 and 2016. The results revealed that the asymmetry of information between majority and minority investors and the financial performance of the companies present a positive, statistically significant relationship, even though the effects on financial performance are small. This type of information asymmetry and its consequent effect on ROA and ROE return measures may explain why the Colombian stock market is attractive to foreign investors.