The Asymmetric Cost of Secrecy: A Bayesian Analysis of Governance, Information Gaps, and Extreme Investment Decisions in Baghdad

2026-09-07T16:24:28+00:00

Emerging markets are characterised by severe information asymmetry and governance challenges, yet research often assumes that their effects on investment efficiency are uniform. This study challenges that assumption, positing that the "cost of secrecy" and the value of governance are asymmetrically distributed across firms. We investigate how corporate governance mechanisms and information asymmetry differentially influence investment efficiency across its conditional distribution—from severe inefficiency to elite performance in Baghdad’s secretive market. Utilising a novel Bayesian quantile regression framework on a panel of 326 firm-year observations (2014-2018), we uncover profound heterogeneity. Results reveal that conventional governance tools like board independence are ineffective for firms experiencing extreme inefficiency but are valuable for moving median firms toward efficiency. Foreign institutional ownership provides an "efficiency premium," most beneficial for high-performing firms. The detrimental effect of information asymmetry is catastrophic at the low-efficiency tail but attenuated for top performers. Furthermore, governance only mitigates information asymmetry for median and high-efficiency firms, failing as a remedy in pathological cases. The discussion emphasises the limitations of average-effect models and the need for contingency-based, distributional thinking in governance theory. These findings urge tailored governance strategies for firms at different performance levels and highlight the need for regulatory focus beyond structural compliance to address deep-seated inefficiency.

Selling to the People’s Republic of China: Privately-Owned Enterprise Generally Pay Suppliers Faster than State-Owned Enterprises

2026-08-22T15:45:45+00:00

Many international businesses view Chinese (Note 1) companies as potential customers to expand exports and reach a large, emerging market. Unlike most developed nations, a significant portion of Chinese businesses are majority government-owned. Consequently, international businesses face a choice between partnering with state-owned enterprises (SOEs) or privately-owned enterprises (POEs) in China. This study analyzes financial data from Chinese firms to examine whether SOEs or POEs generally pay suppliers more quickly, a crucial factor to consider before exporting goods or services to China. We find that POEs, overall, exhibit significantly smaller days payables outstanding, indicating quicker payments to suppliers by those companies.

Asian Journal of Finance & Accounting

The Asymmetric Cost of Secrecy: A Bayesian Analysis of Governance, Information Gaps, and Extreme Investment Decisions in Baghdad

Selling to the People’s Republic of China: Privately-Owned Enterprise Generally Pay Suppliers Faster than State-Owned Enterprises