Investor Competition Over Information and the Pricing of Information Asymmetry
نویسندگان
چکیده
Whether the information environment affects the cost of capital is a fundamental question in accounting and finance research. Relying on theories about competition between informed investors as well as the pricing of information asymmetry, we hypothesize a cross-sectional variation in the pricing of information asymmetry that is conditional on competition. We develop and validate empirical proxies for competition using the number and concentration of institutional investor ownership. Using these proxies, we find a lower pricing of information asymmetry when there is more competition. Overall, our results suggest that competition between informed investors has an important effect on how the information environment affects the cost of capital. First draft: September 2008 Current version: June 2011 The Accounting Review, forthcoming JEL classification: G12, G14
منابع مشابه
Investor Competition and the Pricing of Information Asymmetry
Whether the information environment affects the cost of capital is a fundamental question in accounting and finance research. In this paper, we study the role of competition among informed investors on the pricing of information asymmetry and its implications for the pricing of information quality. Relying on theories on competition among informed investors and on the pricing of information asy...
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