INFORMATION ASYMMETRY AND PERFORMANCE OF LISTED INSURANCE FIRMS IN EMERGING ECONOMY
Keywords:
Asymmetry, Dividend policy, Information disclosure, Investment income, Performance.Abstract
Information Asymmetry (IA) is crucial to the performance of business entities. Universally,
the firm particularly insurance flourishes when information asymmetry (IA) is curtailed to
a manageable level. Information asymmetry encourages insider dealings. Activities of
insider dealings reduce investors' confidence, worsen the public's fear, and impede
insurance firms' performance. Existing studies that evidence the effects of information
asymmetry on the performance of insurance firms in Nigeria are rare.Thus, this study
examined the effects of information asymmetry on the performance of insurance firms in
Nigeria, the country with the largest economy in Africa. The study adopted the purposive
sampling technique to select 28 firms quoted in the Nigerian Exchange Group. Data were
collected from the annual financial report of firms for the period 2007 to 2022 which were
analysed by means of the system generalized method of moments (GMM). Divulgence
variance was employed to measure information asymmetry while performance was
represented by investment income. Findings showed that information asymmetry
significantly inhibits the performance of insurance firms in Nigeria. The study recommends
that insurance regulators should enforce full disclosure of all aspects of insurance
operations and make them accessible to public consumption. This measure will promote
business transparency, stimulate investors’ interest, and improve penetration as well as
increase the performance of insurance firms.