Asymmetric Information in Selected Local Governments in the Central Region of Ghana

Local governments are responsible for development at the local level. Consequently, improvement in the quality of life of the people depends on the degree of responsiveness of local government operatives. In Ghana, service delivery to the communities is poor and social amenities have been provided without recourse to specification and demand, thereby rendering the communities underdeveloped. This study, therefore, sought to find out the causes of the underdevelopment at the local level by examining the concept of asymmetric information and its effects on the operations of five selected Metropolitan, Municipal, and District Assemblies (MMDAs) in the Central Region of Ghana. A qualitative approach was used for the study. An interview guide was used to collect primary data from 25 key informants, representing five informants each from the five local governments. The five key informants were one audit committee member, one internal auditor, one elected assembly member, and two community leaders. Secondary data were collected by the use of document review guide. The data was subjected to framework analysis. The study revealed that the effects of asymmetric information on the operations of the selected local governments were negative; in spite of the availability of professionals with specialised knowledge to ensure efficiency in operations. The study contributes to knowledge by enhancing the praxis of the institutional theory and the transaction cost theory. Research limitations/implications - The qualitative nature of the study limits its findings to the selected local governments. The implication is that the findings of the study cannot be generalised to other contexts or populations. Practical implications - Local governments would continue to experience the harmful effects of asymmetric information if the information gap is not managed properly. Social implications - Policy makers would learn from the experiences which would unfold from the study and apply the recommendations to similar situations. Originality/value - The understanding of the negative effects of asymmetric information would contribute to the appreciation of underdevelopment at the local level.