Effects of board effectiveness and ownership structure on information asymmetry in Thai firms: the moderating role of earnings management

Information plays a crucial role in organizational activities and decision-making. However, internal factors can contribute to discrepancies, resulting in information asymmetry (IA). This study investigates two primary relationships: first, the direct impact of board effectiveness (BE) and ownership structure on IA; and second, the moderating role of earnings management in these relationships. Panel data from 120 publicly listed companies on the Thailand Stock Exchange, spanning the years 2018 to 2022, were analyzed using panel regression with corrected standard errors. The findings reveal that none of the board effectiveness factors, including board independence, board size, gender diversity, board meeting frequency, or board management, significantly reduce IA. However, institutional ownership is found to decrease IA, while family ownership and management ownership show no significant impact. Furthermore, earnings management moderates the relationship between board meeting frequency and IA and significantly influences the relationship between institutional ownership and IA. Although this study does not confirm that board effectiveness improves financial reporting quality, earnings management weakens its impact, further reducing its ability to mitigate IA. A similar pattern is observed in the case of ownership structure. This research contributes to the understanding of corporate governance by exploring the complex dynamics between governance structures and IA. This study provides practical insights for policymakers and practitioners, highlighting the need for robust regulatory frameworks, especially in corporate environments dominated by concentrated ownership, such as families and management. Policymakers should strengthen oversight mechanisms to enhance transparency, while practitioners should focus on improving financial disclosures to reduce IA. These efforts will ultimately boost investor confidence and support sustainable business practices in emerging markets like Thailand.