The Role of Financial Leverage and Accounting Conservatism as Moderating Variables of the Impact of Compliance with Corporate Governance Rules on Information Asymmetry: An Experimental Study on Financial Companies Listed on the Palestine Stock Exchange

Abstract

Purpose: The study aims to demonstrate the extent of the impact of compliance with governance rules on information asymmetry. It also shows the extent of the impact of financial leverage and accounting conservatism as moderating variables.  
Study design/methodology/approach: The content analysis method is applied to measure the extent of compliance with corporate governance rules according to the Corporate Governance Code in Palestine, while the Bid-Ask Spread ratio is used to measure information asymmetry. To achieve the objectives of the study, multiple regression and hierarchical regression are used.
Sample and data:  The study is based on a sample of 12 financial companies listed on the Palestine Stock Exchange during the period 2012-2023.
Results: The results of the study show that there is a statistically significant effect of compliance with the requirements of corporate governance rules on information asymmetry among financial companies listed on the Palestine Stock Exchange. Financial leverage plays a key role as a moderating variable in influencing the relationship between compliance with corporate governance rules and information asymmetry.
Originality/value: The study contributes new evidence on the role of both financial leverage and accounting conservatism as moderating variables in the relationship between compliance with governance rules and information asymmetry.
Research limitations/implications: The study is limited to measuring the moderating role of both financial leverage and accounting conservatism as moderating variables in the nature and extent of the impact of compliance with governance rules on information asymmetry.