This paper examines the relation between the Seasoned Equity Offering (SEO) announcement effect and earnings timeliness. I predict that firms with greater earnings timeliness tend to have less information asymmetry between managers and investors, thus decreasing the magnitude of the price drop at the SEO announcement. As anticipated, I find that SEO negative announcement effect varies inversely...

This paper presents a synthesized model of asymmetric information. An empirical analysis of more than 1,400 NYSE common stocks shows that trade direction is more important than volume in revealing the asymmetry. There is also evidence to suggest that signed duration reflects informed trading activity. We use the proposed measure of information asymmetry to study daily changes in the level of in...

This paper examines the role of management accounting systems (MASs) in the valuation of highgrowth start-up companies. Start-up companies face acute problems of information asymmetry and agency conflicts between founder-manager and external investors that can lead to significant financing frictions and valuation distortions. We postulate that adoption of MASs has a positive impact on firm valu...

We examine the relation between brokerage firms research coverage and their equity ownership in IPO issuers due to earlier venture investments. Equity ownership aligns the interest of brokerage firms and IPO issuers by inducing affiliates to provide research coverage, especially by Institutional Investor all star analysts. Equity ownership also enhances the credibility of affiliated analysts wi...

Market makers in over-the-counter markets often make offsetting trades and have significant market power. We develop a market making model that captures this market feature as well as other important characteristics such as information asymmetry and inventory risk. In contrast to the existing literature, a market maker in our model can optimally shift some trade with the informed to other discr...

Superior to the variance, "swap variance (SwV)" summarizes the entire probability distribution of returns and is unbiased to distributional asymmetry. Retaining the same simplicity as meanvariance (MV) model, the efficiency of mean-swap variance (MSwV) is necessary and sufficient conditions for that of stochastic dominance. The SwV is composed of a quadratic volatility and a proxy of asymmetric...

This study examines whether institutional investors’ voting for All-Star financial analysts is affected by analyst beauty. Using a sample of 1,135 U.S. analysts and controlling for analyst performance, we document that beauty, on average, does not affect the outcome of All-Star analyst voting. However, a beauty premium emerges in those sectors where there is high information asymmetry on analys...

In this paper, we propose that information technology (IT) managers make investment decisions about new IT initiatives based on a modified rational expectation model. Unlike traditional rational expectation models, we emphasize the relevance of market uncertainty and its impact on the return of new IT investment. This results in information acquisition decisions by managers that can cause infor...

Foreign IPO firms incur higher issuance costs than domestic firms due to greater information asymmetry and ex ante valuation uncertainty. Little is known about how to overcome such liability of foreignness. This study, based on foreign-listed Chinese firms, shows that pre-IPO financing relationship with investors from the country of listing can effectively mitigate cross-border information fric...