Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
960995 | Journal of Financial Markets | 2014 | 23 Pages |
Abstract
In this paper, I present a parsimonious, theoretical model to examine the influence of disclosure on market efficiency and on the cost of capital in the presence of endogenous information acquisition. Because disclosure “crowds out” private-information production, disclosure can either improve or harm market efficiency and the cost of capital, depending on whether investors׳ private-information production is sensitive to disclosure. This non-monotonic disclosure-cost-of-capital relation helps reconcile the existing mixed empirical evidence and has implications for the disclosure policies of firms.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Ya Tang,