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- W2109677318 abstract "We study a model where some investors (hedgers) are bad at information processing, while others (speculators) have superior information-processing ability and trade purely to exploit it. The disclosure of financial information induces a trade externality: if speculators refrain from trading, hedgers do the same, depressing the asset price. Market transparency reinforces this mechanism, by making speculators' trades more visible to hedgers. As a consequence, issuers will oppose both the disclosure of fundamentals and trading transparency. Issuers may either under- or over-provide information compared to the socially efficient level if speculators have more bargaining power than hedgers, while they never under-provide it otherwise. When hedgers have low financial literacy, forbidding their access to the market may be socially efficient." @default.
- W2109677318 created "2016-06-24" @default.
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- W2109677318 date "2012-01-01" @default.
- W2109677318 modified "2023-10-05" @default.
- W2109677318 title "Financial Disclosure and Market Transparency with Costly Information Processing" @default.
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- W2109677318 doi "https://doi.org/10.2139/ssrn.2164839" @default.
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