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The adverse effect of information on governance and leverage

Abstract:

We study the effect that internal information systems have upon a firm’s leverage and corporate governance choices. Information systems lower governance costs by facilitating more targeted interventions. But they also generate asymmetric information between firms and their investors. As a result, firms may attempt to signal their superior quality by assuming more leverage. In some circumstances, this can reduce governance incentives and result in inferior outcomes. Investors anticipate this e...

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Publication status:
Published
Peer review status:
Peer reviewed

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Publisher copy:
10.1287/mnsc.2016.2599

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Institution:
University of Oxford
Division:
SSD
Department:
Said Business School
Role:
Author
Publisher:
INFORMS
Journal:
Management Science More from this journal
Volume:
64
Issue:
4
Pages:
1510-1527
Publication date:
2017-02-21
Acceptance date:
2016-04-26
DOI:
EISSN:
1526-5501
ISSN:
0025-1909
Keywords:
Pubs id:
pubs:632219
UUID:
uuid:8eed5487-1ecc-4c3f-acb2-983689e64903
Local pid:
pubs:632219
Source identifiers:
632219
Deposit date:
2016-07-06

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