Information Asymmetry within Financial Markets and Corporate Financing Decisions

It is worth noticing that a great deal of interest has recently been paid by the financial literature with respect to the relationship prevailing between the information asymmetry and the financing decisions regarding 150 firms listed on the SBF 250 index over the period ranging from 2005 to 2012. The achieved estimation results have revealed that most variables turn out to be significantly correlated with financial leverage. This significant correlation is established not only starting from a static model estimated by OLS, taking into account the fixed individual specificities, but also by relying a dynamic model estimated by GMM in difference explaining the leverage variation by its last variation. These results prove to be so conclusive as to corroborate the variables relevance thesis as pertaining to the hierarchical financing theory. Indeed, they have turned out to reveal that French firms tend to resort more to debt above all with respect to the information asymmetry case as prevailing as between managers and investors.