Competing Information Sources

2017 ◽  
Vol 93 (4) ◽  
pp. 151-176 ◽  
Author(s):  
Eti Einhorn
Keyword(s):  
Private Information ◽  
Voluntary Disclosure ◽  
Stock Price ◽  
Information Sources ◽  
Equilibrium Shape ◽  
Public And Private ◽  
Full Disclosure ◽  
Additional Information ◽  
Disclosure Strategy ◽  
Selective Disclosure

ABSTRACT This study analyzes corporate voluntary disclosures to the capital market in the presence of competing information sources, from which traders can subsequently obtain additional public and private information. The analysis demonstrates that the anticipated access of traders to additional information sources may significantly alter the voluntary disclosure strategy of firms. It may explain a deviation from the conventional full disclosure equilibrium to equilibrium with partial and selective disclosure. It may also lead to an untypical equilibrium shape, where any information content can be disclosed and can be withheld with a positive probability, and where the stock price reflects a pricing discount upon disclosure rather than in its absence. JEL Classifications: D82; G10; M41.

The Public and Private Information Sources of Volatility

2011 ◽  
Author(s):  
Anne Opschoor ◽  
Michel van der Wel ◽  
Dick J. C. van Dijk ◽  
Nicholas Taylor
Keyword(s):  
Private Information ◽  
Information Sources ◽  
Public And Private ◽  
The Public

Do Managers Disclose or Withhold Bad News? Evidence from Short Interest

2018 ◽  
Vol 94 (3) ◽  
pp. 1-26 ◽  
Author(s):  
Dichu Bao ◽  
Yongtae Kim ◽  
G. Mujtaba Mian ◽  
Lixin (Nancy) Su
Keyword(s):  
Private Information ◽  
Voluntary Disclosure ◽  
Stock Price ◽  
Data Availability ◽  
Bad News ◽  
General Tendency ◽  
Litigation Risk ◽  
Novel Approach ◽  
Conflicting Evidence ◽  
Short Interest

ABSTRACT Prior studies provide conflicting evidence as to whether managers have a general tendency to disclose or withhold bad news. A key challenge for this literature is that researchers cannot observe the negative private information that managers possess. We tackle this challenge by constructing a proxy for managers' private bad news (residual short interest) and then perform a series of tests to validate this proxy. Using management earnings guidance and 8-K filings as measures of voluntary disclosure, we find a negative relation between bad-news disclosure and residual short interest, suggesting that managers withhold bad news in general. This tendency is tempered when firms are exposed to higher litigation risk, and it is strengthened when managers have greater incentives to support the stock price. Based on a novel approach to identifying the presence of bad news, our study adds to the debate on whether managers tend to withhold or release bad news. Data Availability: Data used in this study are available from public sources identified in the study.

scholarly journals The Pitfall of Selective Environmental Information Disclosure on Stock Price Crash Risk: Evidence From Polluting Listed Companies in China

2021 ◽  
Vol 9 ◽  
Author(s):  
Fei Xu ◽  
Qiang Ji ◽  
Mian Yang
Keyword(s):  
Information Disclosure ◽  
Stock Price ◽  
Listed Companies ◽  
Legal Regulation ◽  
Environmental Information ◽  
Crash Risk ◽  
Government Control ◽  
Environmental Information Disclosure ◽  
Disclosure Strategy ◽  
Selective Disclosure

Due to incomplete legal regulation, enterprises have the motive of selective environmental information disclosure (EID), and such selective disclosure strategy may result in stock price crash risk. In this study, the EID scores of China’s 1,010 polluting listed companies between 2007 and 2017 are first measured by employing the text analysis approach. Subsequently, we empirically examine the impacts of corporate’s selective EID on the stock price crash risk. The results indicate that EID of China’s polluting listed companies has significantly increased their stock price crash risk, rather than reducing it. Specifically, the EID of polluting companies with lower information efficiency, higher inefficient investment, higher degree of government control, and location in lower marketization areas is more likely to increase their stock price crash risk. Additional analyses reveal that the EID of polluting listed companies in China cannot reduce their stock price synchronization, which means that the selective disclosure of environmental information of China’s polluting listed companies is useless, and thus cannot reduce the risk of stock price crash.

Analysts' Information Acquisition and Stock Price Synchronicity: A Regulatory Perspective from China

2018 ◽  
Vol 33 (1) ◽  
pp. 153-179 ◽  
Author(s):  
Haiyan Jiang ◽  
Donghua Zhou ◽  
Joseph H. Zhang
Keyword(s):  
Insider Trading ◽  
Private Information ◽  
Stock Prices ◽  
Information Acquisition ◽  
Stock Price ◽  
Specific Information ◽  
Stock Price Synchronicity ◽  
Playing Field ◽  
Information Advantage ◽  
Private Information Acquisition

SYNOPSIS Against the backdrop of the Chinese Directive 40 (China's Reg FD) issued in 2007 as an attempt to curb insider trading and to level the information playing field, this study investigates whether analysts' private information acquisition influences the extent to which firm-specific information is impounded into stock prices, i.e., stock price synchronicity, and how the restrictions on selective disclosures imposed by Directive 40 have shaped the relationship between analyst information acquisition and synchronicity. Using a pre-Directive 40 sample, we show that synchronicity is negatively related to analysts' private information acquisition, which provides support for the “information advantage” argument of analysts' information production. However, the ability of analysts' private information acquisition in improving firm-specific information incorporated into stock price is mitigated post-Directive 40 due to a restriction on selective disclosures and/or private communication. Moreover, we find that this regulatory impact varies for firms being followed by affiliated analysts versus non-affiliated analysts. JEL Classifications: G14; G15; G17; G18.

scholarly journals Delegated trade and the pricing of public and private information

2015 ◽  
Vol 60 (2-3) ◽  
pp. 8-32 ◽  
Author(s):  
Daniel J. Taylor ◽  
Robert E. Verrecchia
Keyword(s):  
Private Information ◽  
Public And Private
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