Investor Competition Over Information and the Pricing of Information Asymmetry
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Verdi_Investor Competition.pdf
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283.01 KB
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Author(s)
Akins, Brian Keith
Ng, Jeffrey
Verdi, Rodrigo
Date Issued
June 2011
Journal
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
Abstract
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.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike 3.0
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DOI of Published Version
http://aaapubs.org/doi/pdf/10.2308/accr-10157
