Publication Type
Journal Article
Version
Preprint
Publication Date
1-2012
Abstract
Whether the information environment affects the cost of capital is a fundamental question in accounting and finance research. Relying on theories about competition between informed investors as well as the pricing of information asymmetry, we hypothesize a cross-sectional variation in the pricing of information asymmetry that is conditional on competition. We develop and validate empirical proxies for competition using the number and concentration of institutional investor ownership. Using these proxies, we find a lower pricing of information asymmetry when there is more competition. Overall, our results suggest that competition between informed investors has an important effect on how the information environment affects the cost of capital.
Keywords
Information Risk, Information Quality, Asset Pricing
Discipline
Accounting | Corporate Finance
Research Areas
Financial Performance Analysis
Publication
Accounting Review
Volume
87
Issue
1
First Page
35
Last Page
58
ISSN
0001-4826
Identifier
10.2308/accr-10157
Publisher
American Accounting Association
Citation
Atkins, Brian K.; NG, Jeffrey; and Verdi, Rodrigo.
Investor competition over information and the pricing of information asymmetry. (2012). Accounting Review. 87, (1), 35-58.
Available at: https://ink.library.smu.edu.sg/soa_research/876
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
http://doi.org/10.2308/accr-10157