The Success of Equity Option Listings and the Role of the Asymmetric Information

2012 ◽  
Author(s):  
Alejandro Bernales ◽  
Massimo Guidolin
Keyword(s):  
Asymmetric Information ◽  
Equity Option

scholarly journals Welfare Consequences of Information Aggregation and Optimal Market Size

2017 ◽  
Vol 9 (4) ◽  
pp. 303-323 ◽  
Author(s):  
Kei Kawakami
Keyword(s):  
Asymmetric Information ◽  
Risk Aversion ◽  
Risk Sharing ◽  
Information Aggregation ◽  
Market Size ◽  
Positive Externality ◽  
Trading Model ◽  
Welfare Implications ◽  
The Right

We analyze the welfare implications of information aggregation in a trading model where traders have both idiosyncratic endowment risk and asymmetric information about security payoffs. The optimal market size balances two forces: (i) the risk-sharing role of markets, which creates a positive externality amongst traders, against (ii) the information-aggregation role of prices, which leads to prices that are more correlated with security payoffs, thereby undermining the hedging function of markets. Our analysis indicates that a market with infinitely many traders may not be the right welfare benchmark in the presence of risk aversion and information aggregation. (JEL D43, D62, D82, D83)

The Theory and Practice of Investor Relations: A Global Perspective

2020 ◽  
Vol 66 (10) ◽  
pp. 4746-4771 ◽  
Author(s):  
G. Andrew Karolyi ◽  
Dawoon Kim ◽  
Rose Liao
Keyword(s):  
Asymmetric Information ◽  
Survey Data ◽  
Theory And Practice ◽  
Global Perspective ◽  
Global Markets ◽  
Investor Relations ◽  
Senior Executives ◽  
Global Media ◽  
Valuation Ratios

Using proprietary survey data of investor relations (IR) officers from 59 countries, we uncover new stylized facts on a wide variety of IR functions, such as the firm’s interactions with brokers and investors, the formulation of its disclosure policies, and its global outreach efforts. We find that IR activities vary widely across firms, industries, and countries. They have become increasingly important, as reflected by the more frequent involvement of IR officers with senior executives on a day-to-day basis. We also find that large and complex firms receiving greater media attention engage more in IR activities. In addition, firms domiciled in countries with weaker legal protections for investors and poorer disclosure standards, those cross-listed in the stock markets that are outperforming, and those with high global media visibility invest in greater global outreach efforts with IR activities. Firms’ IR efforts to investors worldwide are associated with higher Tobin’s q valuation ratios. We interpret our findings in the context of theories and existing evidence on the role of asymmetric information and governance problems in global markets. This paper was accepted by David Simchi-Levi, finance.

Lying: An Experimental Investigation of the Role of Situational Factors

2011 ◽  
Vol 21 (4) ◽  
pp. 605-632 ◽  
Author(s):  
Lucy F. Ackert ◽  
Bryan K. Church ◽  
Xi (Jason) Kuang ◽  
Li Qi
Keyword(s):  
Experimental Investigation ◽  
Asymmetric Information ◽  
Laboratory Experiment ◽  
Social Distance ◽  
Dictator Game ◽  
Situational Factors ◽  
Theoretical Development ◽  
Self Image ◽  
Perceived Familiarity

ABSTRACT:Individuals often lie for psychological rewards (e.g., preserving self image and/or protecting others), absent economic rewards. We conducted a laboratory experiment, using a modified dictator game, to identify conditions that entice individuals to lie solely for psychological rewards. We argue that such lies can provide a ready means for individuals to manage others’ impression of them. We investigated the effect of social distance (the perceived familiarity, intimacy, or psychological proximity between two parties) and knowledge of circumstances (whether parties have common or asymmetric information) on the frequency of lying. We found that lying occurs more frequently when social distance is near and that the effect is exacerbated when information is asymmetric. Our theoretical development suggests that, under these conditions, individuals’ need to manage others’ impression is magnified. We discuss the implications of our findings.

Sign in / Sign up

Export Citation Format

Share Document