Influence of information asymmetry on the assessment of a company’s solvency
Abstract
Introduction. The environment in which enterprises operate in the 21st century is becoming qualitatively different: the intensification of competition in a saturated market leads to an increase in the degree of uncertainty, and hence to the emergence of unpredictable factors. Because uncertainty is a source of risk, it should be minimized by obtaining quality, reliable, comprehensive information. In Ukraine, declaring asymmetric information is done in a completely opposite way than abroad: real property, revenue and profit, on the contrary to developed capitalist countries, are understated to minimize taxation. In both cases, such information asymmetry gives potential investors misconceptions about the solvency of a company and the efficiency of its activities.
Aim and tasks. To investigate how the presence of information asymmetry in the economic environment affects the assessment of the solvency of economic entities from the perspective of investors. The obtained conclusions will allow to determine what exactly needs to be done in the direction of further improvement of regulatory instruments of state policy in this area.
Research results. With the growth of information saturation of society and the greater extent of replication and interpretation of source information, it becomes easier to abuse, manipulate information, and to mislead people. Obstructing the rational behavior of economic entities and generating additional costs (information retrieval costs), the asymmetry of information leads to inefficient functioning, and also causes restrictions on competition. The main universal models of investor behavior in a market in the conditions of information asymmetry, which are actually aimed at the inevitability of unexpected and sharp reversals of market conditions (so-called "black swans"), are analyzed.
Conclusion. A company's financial statements contain information that should be interpreted as asymmetrically distributed information. Approaches based on methods of detecting and accounting for asymmetry in the annual reporting of companies are promising for remedying its negative impact. On the other hand, these approaches must also take into account the fact that in the XXI century, the functions of intermediaries are easily deformed, information technologies are ineffective, and the rules of rational behavior may lead to failure. Therefore, overcoming uncertainty and information asymmetry requires taking into account N. Taleb's approach to the existence of "black swans". Moreover, it is a demand of the present time: in early 2020, the whole world encountered one of these "black swans", namely the global COVID-19 outbreak.
Keywords:
crisis, uncertainty, financial reporting, information asymmetry, solvency.References
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