What the Seller Won’t Tell You: Persuasion and Disclosure in Markets
نویسنده
چکیده
Imagine that you are considering an investment in a new public offering of a firm’s shares. The firm’s officers have visited your city to make a presentation which included an audited financial statement, an earnings forecast was reviewed by its prestigious investment bankers, and an impressive demonstration of it new technology. Should such a presentation convince you to invest? How concerned should you be if no mention was made about a rumored competitor with a different technology? An economist reflecting on these same questions from the standpoint of policy might wonder: Does the firm’s need to convince naturally skeptical investors provide sufficient incentives for it to disclose accurate information in the right form and amounts? Could regulations mandating disclosure sometimes improve the quality of investment decisions? What kinds of regulations are likely to be most helpful, and when?
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