International Journal of Applied Economics, Finance and Accounting ISSN 2577-767X Vol. 17, No. 1, pp. 186-201 2023 DOI: 10.33094/ijaefa.v17i1.1097 © 2023 by the authors; licensee Online Academic Press, USA 186 © 2023 by the authors; licensee Online Academic Press, USA Accounting similarities, sophisticated investors, relevance and information asymmetry Alireza Azarberahman 1* Saeed Pakdelan 2 Malihe Tohidinia 3 1,2,3 Shandiz Institute of Higher Education, Mashhad, Iran. 1 Email: a.azarberahman@shandiz.ac.ir 2 Email: s.pakdelan@shandiz.ac.ir 3 Email: m.tohidi.21@gmail.com Licensed: This work is licensed under a Creative Commons Attribution 4.0 License. Keywords: Accounting similarities Information asymmetry Relevance Sophisticated investors. JEL Classification: M41; M48; M49. Received: 30 May 2023 Revised: 16 June 2023 Accepted: 1 August 2023 Published: 11 August 2023 (* Corresponding Author) Abstract Information asymmetry is a phenomenon in the capital market that can be caused by various factors. The purpose of this paper is to contribute to the debate on whether information asymmetry can be affected by factors such as accounting comparability, sophisticated investors, and relevance, and therefore, its value-relevance for decision-making. The paper uses three methods criteria for information asymmetry (VOLTRADE, PNSY and bid-ask spread) as well as two methods for measuring accounting comparability (text mining and De-Franco). Therefore, it is feasible to test and compare different methods of accounting comparability with different methods of information asymmetry. The results of the study indicate that the comparability of accounting practises has a notable adverse impact on information asymmetry. Additionally, it was observed that sophisticated investors have the ability to moderate this relationship. We find that relevance has significant relation with information asymmetry. Furthermore, it has been determined that comparability exerts a substantial influence on information asymmetry within an imperfectly competitive market, as opposed to a market characterised by perfect competition. Therefore, these findings underscore the significance of considering market conditions and competition levels in the issue. Ultimately, our findings indicate that the cash flow component of comparability exerts a notable impact on information asymmetry, in contrast to the accrual component. This study provides new insights regarding the nexus between accounting comparability and financial asymmetry. Funding: This study received no specific financial support. Institutional Review Board Statement: Not applicable. Transparency: The authors confirm that the manuscript is an honest, accurate, and transparent account of the study; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. This study followed all ethical practices during writing. Data Availability Statement: The corresponding author may provide study data upon reasonable request. Competing Interests: The authors declare that they have no competing interests. Authors’ Contributions: All authors contributed equally to the conception and design of the study. All authors have read and agreed to the published version of the manuscript. 1. Introduction Information economics is one of the issues that have been developed in the field of economics. The primary discussion in Information economics is about asymmetric information. Asymmetric information means that different groups with different levels of knowledge about the subject are facing each other. For example, managers who are relatively more knowledgeable than other people such as potential shareholders who are almost completely unaware of the company’s financial status (Tilles, Ferreira, Francisco, Pereira, & Sarti, 2011). Information asymmetry brings various adverse individual and collective consequences in the market. Several consequences, including a reduction in the number of individuals engaging in trading