DOES ASYMMETRIC INFORMATION INFLUENCE FOREIGN DIRECT INVESTMENT?

• Published in: Journal of Sustainability Science and Management
• Main Author: Abdul-Rahman A.; Noor N.A.M.; Rahim R.A.
• Format: Article
• Language: English
• Published: Universiti Malaysia Terengganu 2022
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85137628983&doi=10.46754%2fjssm.2022.08.007&partnerID=40&md5=d559e43ad865c6d16d6f5f7c279b1be4

The study investigates the link between asymmetric information through market micro-structures and Foreign Direct Investment (FDI) using daily stock prices of listed companies from ASEAN+3 countries. Asymmetric information in the stock market is measured using liquidity and illiquidity measures of Amivest and Amihud, respectively. The findings from static panel regression analysis reveal that Amivest has a positive relationship while Amihud has a negative relationship with FDI. This relationship infers that high stock liquidity reduces price movement, increases transparency, decreases asymmetric information and ultimately encourages FDI, Conjecture has an inverse asymmetric information-FDI relationship. The findings show the importance of policymakers and industry players in stimulating market transparency to welcome foreign investment in the economy. © Penerbit UMT