Management-defined Performance Measures och dess påverkan på informationsasymmetri

Abstract

The purpose of this paper is to examine the relation between the usage of management-defined performance measures (MPM’s) and bid-ask spread. This topic is highly relevant as MPM’s will be regulated by IASB as of 2027 and prior research does not fully examine this relationship. In this paper bid-ask spread is used as a proxy for information asymmetry and we will examine if a difference in reporting MPM’s results in a difference in information asymmetry. The report has examined a selection of 280 companies randomly selected from all public companies within the EU. The two main variables which have been manually collected from annual reports are the number of MPM’s and whether they disclose those MPM’s. The report found a significant negative relationship between both variables and bid-ask spread. The report also found a relationship between a company having both a high number of MPM’s and disclosing those, and bid-ask spread. This coefficient had a bigger negative impact on bid-ask spread than using the variables separately, showcasing that both having a high number of MPM’s while simultaneously disclosing these have the largest impact on information asymmetry. These results can contribute to future research on the effects of IFRS 18, as well as research on information asymmetry in relation to reporting choices.