Title: Decreasing information asymmetry by sharing business data: a case of business non-payers sharing agency

Authors: Igor Perko; Franjo Mlinarič

Addresses: Faculty of Economics and Business, University of Maribor, Slovenia ' Faculty of Economics and Business, University of Maribor, Slovenia

Abstract: The primary source of data published about a company is the company itself. Transparent reporting relies on the ability to measure the actual state of the affairs in the company and management's orientation to transparency and is tested every time negative data is to be reported. External interested parties are therefore potentially biased by the information asymmetry risk originating from the company's inability to determine its current state, aversion to reporting negative information, or inability to apprehend the available information. Decreasing information asymmetry in business relations and ensuring greater transparency are prerequisites for building trustworthy relations. A counterpart's creditworthiness is key information for efficient resource allocation and fair pricing. Traditional approaches like buying data from rating agencies or analysing past accounting information has proved costly and misleading, especially at major turning points. We propose introducing a data-sharing mechanism whereby business partner data is shared to gain mutual advances. The proposal is focused on sharing the non-payment pattern data. We start by providing a business risk-oriented discussion; then, using a real-life experiment, we examine the information-sharing agency policies, show data structures and data processing, and present an example of the defaults report.

Keywords: information asymmetry; data sharing; non-payment; default; credit risk; business data; trustworthiness; resource allocation; fair pricing; information sharing; data structures; data processing.

DOI: 10.1504/IJRAM.2016.074435

International Journal of Risk Assessment and Management, 2016 Vol.19 No.1/2, pp.54 - 67

Received: 14 Mar 2014
Accepted: 13 Jun 2014
Published online: 30 Jan 2016 *

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