The effect of asymmetric information on product market outcomes

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• 作者：Matthew T. Billett^a ; ^{mbillett@indiana.edu} ; Jon A. Garfinkel^b ; ^{jon-garfinkel@uiowa.edu} ; Miaomiao Yu^c ; ^{yu@edwards.usask.ca}
• 关键词：Asymmetric information ; Analysts ; Market share
• 刊名：Journal of Financial Economics
• 出版年：2017
• 出版时间：February 2017
• 年：2017
• 卷：123
• 期：2
• 页码：357-376
• 全文大小：751 K
• 卷排序：123

文摘

We explore how asymmetric information in financial markets affects outcomes in product markets. Difference-in-difference tests around brokerage house merger/closure events (which increase asymmetric information through reductions in analyst coverage) indicate worse industry-adjusted sales growth for shocked firms than for their peers. Our results are consistent with Bolton and Scharfstein's (1990) tradeoff between investor agency concerns and predation risk. Further support is found in stronger treatment effects among firms with ex ante greater agency concerns, financing constraints, asymmetric information, and those operating in ex ante more competitive (fluid) product market spaces. Our results are concentrated in industries where we can clearly identify either net firm entry or exit.