Investor Competition Over Information and the Pricing of Information Asymmetry
Author(s)
Akins, Brian Keith; Ng, Jeffrey; Verdi, Rodrigo
DownloadVerdi_Investor Competition.pdf (283.0Kb)
OPEN_ACCESS_POLICY
Open Access Policy
Creative Commons Attribution-Noncommercial-Share Alike
Terms of use
Metadata
Show full item recordAbstract
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.
Date issued
2011-06Department
Sloan School of ManagementJournal
Accounting Review
Publisher
American Accounting Association
Citation
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.
Version: Author's final manuscript
ISSN
1558-7967
0001-4826