Yardstick Competition to Elicit Private Information: An Empirical Analysis

2012 ◽  
Vol 40 (4) ◽  
pp. 313-338 ◽  
Author(s):  
Ayako Suzuki
Keyword(s):  
Empirical Analysis ◽  
Private Information ◽  
Yardstick Competition

scholarly journals Vertical Contracting with Informational Opportunism

2015 ◽  
Vol 105 (7) ◽  
pp. 2141-2182 ◽  
Author(s):  
Vianney Dequiedt ◽  
David Martimort
Keyword(s):  
Private Information ◽  
Incentive Compatibility ◽  
Yardstick Competition ◽  
Trade Off ◽  
Bilateral Contracts ◽  
Ex Post ◽  
Wide Range ◽  
New Form ◽  
Correlated Information ◽  
Vertical Contracting

We consider vertical contracting arrangements between a manufacturer and a retailing network when retailers have private information and the organization is run through bilateral contracts. We highlight a new form of informational opportunism arising when the manufacturer manipulates information learned separately in each relationship. We characterize the set of allocations robust to such opportunism by means of simple ex post incentive compatibility constraints. Those constraints limit the manufacturer's ability to use yardstick competition among retailers. They simplify contracts and restore a rent/efficiency trade-off even with correlated information. We show that sell-out contracts are optimal under a wide range of circumstances. (JEL D21, D86, L14, L60, L81)

Communicating Private Information to the Equity Market Before a Dividend Cut: An Empirical Analysis

2014 ◽  
Vol 49 (5-6) ◽  
pp. 1167-1199 ◽  
Author(s):  
Thomas J. Chemmanur ◽  
Xuan Tian
Keyword(s):  
Empirical Analysis ◽  
Private Information ◽  
Stock Return ◽  
Equity Market ◽  
Return Volatility ◽  
Reduction Theory ◽  
Data Set ◽  
Stock Return Volatility ◽  
Empirical Results ◽  
Alternative Theories

AbstractThis paper presents the first empirical analysis of the choice of firms regarding whether to release private information (“prepare the market”) in advance of a possible dividend cut and the consequences of such market preparation. We use a hand-collected data set of dividend cutting firms, which allows us to distinguish between prepared and nonprepared dividend cutters and to test the implications of two alternative theories: the “signaling through market preparation” theory and the “stock return volatility reduction” theory. We document several important differences between prepared and nonprepared dividend cutters. Overall, our empirical results are consistent with the signaling theory.

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