Asymmetric Information and Firm Value During Pandemic Covid-19

Abstract

The purpose of this study is to investigate the relationship between fundamental factors, asymmetric information, and firm value during the 2020 pandemic by taking samples of 457 non-financial companies listed on the Indonesian Stock Exchange. Two-stage least square testing by controlling the firm’s and industrial characteristics proves that asymmetric information does not have a dominant role in explaining firm value changes during the COVID-19 pandemic. This study also confirms that (1) the disclosure of information through corporate financial reports and foreign investors’ presence still has a dominant role in mitigating information gaps among traders; (2) foreign investors' trading behavior indirectly provides information through their shares' trading flow, which causes a decrease in asymmetric information. This comprehensive empirical testing provides additional evidence regarding asymmetric information and firm value in developing markets during the pandemic.