Investigating the effect of information asymmetry on the relationship between stock overvaluation and bank loan yield gap

Abstract

Since investors, as the main sources of corporate resources, demand complete and accurate corporate information, stock overvaluation and information asymmetry can affect investors, creditors, accounting policy makers, and consequently society as a whole. The present study focuses on public and private lenders such as banks. Because banks are more active than other public lenders in monitoring and reviewing borrowing companies, they can recognize the overvaluation of corporate stocks and widen the bank loan debt gap. The purpose of this study is to investigate the effect of information asymmetry on the relationship between stock overvaluation and bank loan yield gap. In this regard, to test the hypotheses, 94 companies in the stock exchange during the years 2011 to 2016 were selected and the hypotheses were tested using regression analysis of composite data. The results indicate that information asymmetry increases the effects of stock overvaluation on the bank loan yield gap.

Keywords

• information asymmetry
• stock overvaluation
• bank loan yield gap
• tehran stock exchange