Abstract: In this paper, we analyze the effects of asymmetric degree of information on the manager’s utility, the financial structure and the market value of a firm. The results show that, if the firm’s investment is high quality, as the decrease of the asymmetric degree of the information, the market value and the debt level of the firm’s investment increase. If the firm’s investment is low-quality, as the decrease of the asymmetric degree of information, the market value and the debt level of the firm’s investment decrease. The relationship between the change of the proportion of the outside informed investors and the change of manager’s utility is correlated with the quality of a firm.

Key words: asymmetric, signal, game, incentive