Investor Competition Over Information and the Pricing of Information Asymmetry
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...
| Main Authors: | , , |
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| Other Authors: | |
| Format: | Article |
| Language: | en_US |
| Published: |
American Accounting Association
2011
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| Online Access: | http://hdl.handle.net/1721.1/67337 https://orcid.org/0000-0003-1231-7374 |
| _version_ | 1811096963877175296 |
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| author | Akins, Brian Keith Ng, Jeffrey Verdi, Rodrigo |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Akins, Brian Keith Ng, Jeffrey Verdi, Rodrigo |
| author_sort | Akins, Brian Keith |
| collection | MIT |
| description | 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_indexed | 2024-09-23T16:52:10Z |
| format | Article |
| id | mit-1721.1/67337 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T16:52:10Z |
| publishDate | 2011 |
| publisher | American Accounting Association |
| record_format | dspace |
| spelling | mit-1721.1/673372022-09-29T22:00:59Z Investor Competition Over Information and the Pricing of Information Asymmetry Akins, Brian Keith Ng, Jeffrey Verdi, Rodrigo Sloan School of Management Verdi, Rodrigo Verdi, Rodrigo Akins, Brian Keith Ng, Jeffrey 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. Deloitte Foundation 2011-11-30T22:10:49Z 2011-11-30T22:10:49Z 2011-06 Article http://purl.org/eprint/type/JournalArticle 1558-7967 0001-4826 http://hdl.handle.net/1721.1/67337 Atkins, Brian, Jeffrey Ng and Rodrigo R. Verdi. "Investor Competition Over Information and the Pricing of Information Asymmetry." The Accounting Review 87.1 (January 2012), p. 35-58. https://orcid.org/0000-0003-1231-7374 en_US http://aaapubs.org/doi/pdf/10.2308/accr-10157 Accounting Review Creative Commons Attribution-Noncommercial-Share Alike 3.0 http://creativecommons.org/licenses/by-nc-sa/3.0/ application/pdf American Accounting Association SSRN |
| spellingShingle | Akins, Brian Keith Ng, Jeffrey Verdi, Rodrigo Investor Competition Over Information and the Pricing of Information Asymmetry |
| title | Investor Competition Over Information and the Pricing of Information Asymmetry |
| title_full | Investor Competition Over Information and the Pricing of Information Asymmetry |
| title_fullStr | Investor Competition Over Information and the Pricing of Information Asymmetry |
| title_full_unstemmed | Investor Competition Over Information and the Pricing of Information Asymmetry |
| title_short | Investor Competition Over Information and the Pricing of Information Asymmetry |
| title_sort | investor competition over information and the pricing of information asymmetry |
| url | http://hdl.handle.net/1721.1/67337 https://orcid.org/0000-0003-1231-7374 |
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