In Defense of Limited Manufacturing Cost Control: Disciplining Acquisition of Private information by Suppliers

2021 ◽  
Author(s):  
Anil Arya ◽  
Brian Mittendorf ◽  
Ram N.V. Ramanan
Keyword(s):  
Private Information ◽  
Information Acquisition ◽  
Cost Control ◽  
Terms Of Trade ◽  
Manufacturing Cost ◽  
Modest Increase ◽  
Reporting Decisions ◽  
The Cost ◽  
Informational Advantage ◽  
Internal Production

When a firm's input supplier can acquire and misreport private information to gain an edge in negotiations, we show that the firm can blunt the supplier's informational advantage by permitting inefficiencies in its own internal production. Specifically, we establish that a modest increase in the cost of the input(s) a firm makes internally credibly commits it to be more aggressive in negotiations with a supplier for the input(s) the firm buys. Recognizing that its potential information rents will be limited, the supplier, in turn, becomes less aggressive in information acquisition. The paper fully characterizes the equilibrium - the firm's investments, the supplier's information acquisition and reporting decisions, and the terms of trade - to demonstrate that often-maligned internal bloat can be an endogenous facilitator of efficient outsourcing.

scholarly journals Trading in the Presence of Short-Lived Private Information: Evidence from Analyst Recommendation Changes

2018 ◽  
Vol 53 (4) ◽  
pp. 1509-1546 ◽  
Author(s):  
Ohad Kadan ◽  
Roni Michaely ◽  
Pamela C. Moulton
Keyword(s):  
Private Information ◽  
Information Acquisition ◽  
Trading Strategies ◽  
Data Set ◽  
Liquidity Provision ◽  
Information Models ◽  
Trading Patterns ◽  
Informed Traders ◽  
Theoretical Predictions ◽  
Informational Advantage

We use a proprietary data set to test the implications of several asymmetric information models on how short-lived private information affects trading strategies and liquidity provision. Our identification rests on information acquisition before analyst recommendations are publicly announced. We provide the first empirical evidence supporting theoretical predictions that early-informed traders “sell the news” after “buying the rumor.” Further, we find distinct profit-taking patterns across different classes of institutions. Uninformed institutions, but not individuals, emerge as de facto liquidity providers to better-informed institutions. Placebo tests confirm that these trading patterns are unique to situations in which some investors have a short-lived informational advantage.

Institutional Investors, Private Information, and the Cost of Capital

2011 ◽  
Author(s):  
Huong Giang (Lily) Nguyen ◽  
Xiangkang Yin ◽  
Luong Hoang Luong
Keyword(s):  
Private Information ◽  
Institutional Investors ◽  
Cost Of Capital ◽  
The Cost

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 Competing Conventions with Costly Information Acquisition

Games ◽  
2021 ◽  
Vol 12 (3) ◽  
pp. 53
Author(s):  
Roberto Rozzi
Keyword(s):  
Information Acquisition ◽  
Evolutionary Model ◽  
Equilibrium Selection ◽  
The Other ◽  
Group Interactions ◽  
Social Coordination ◽  
Long Run ◽  
Stochastic Stability Analysis ◽  
The Stability ◽  
The Cost

We consider an evolutionary model of social coordination in a 2 × 2 game where two groups of players prefer to coordinate on different actions. Players can pay a cost to learn their opponent’s group: if they pay it, they can condition their actions concerning the groups. We assess the stability of outcomes in the long run using stochastic stability analysis. We find that three elements matter for the equilibrium selection: the group size, the strength of preferences, and the information’s cost. If the cost is too high, players never learn the group of their opponents in the long run. If one group is stronger in preferences for its favorite action than the other, or its size is sufficiently large compared to the other group, every player plays that group’s favorite action. If both groups are strong enough in preferences, or if none of the groups’ sizes is large enough, players play their favorite actions and miscoordinate in inter-group interactions. Lower levels of the cost favor coordination. Indeed, when the cost is low, in inside-group interactions, players always coordinate on their favorite action, while in inter-group interactions, they coordinate on the favorite action of the group that is stronger in preferences or large enough.

From a Seed to a Need: the Growth of Shape Memory Applications in Europe.

1991 ◽  
Vol 246 ◽  
Author(s):  
Ir. J. Van Humbeeck
Keyword(s):  
Shape Memory ◽  
Low Cost ◽  
Marketing Research ◽  
Research Approach ◽  
Manufacturing Cost ◽  
Product Price ◽  
Key Factor ◽  
Place Promotion ◽  
Memory Applications ◽  
The Cost

AbstractA more systematic marketing research approach has finally revealed good ideas anticipating a market need for the use of shape memory alloys. The success of those new ideas, prototypes and applications are analysed in terms of “the value of the function”, defined as the importance of the function divided by the cost of providing the function. A high importance and/or a low cost of the function are thus the basic requirements for the successful introduction of shape memory applications. Attention is also paid to the way how the 4 P's, product, price, place, promotion (the marketing mix) are applied by the European companies. Those different items will be illustrated on the basis of some small-, medium- and largescale applications, used in different markets. “to the point research”, fundamental and applied, on material properties as well as on manufacturing (cost reduction) is being discussed as the key factor to increase the function value.

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