The Endogeneity of Information Asymmetry and Corporate Financing Decisions
We propose that firms endogenize the extent of information asymmetry by choosing the optimal level and channels of direct disclosures or communication with the capital markets. Firms choose more communication when they have a greater potential demand for external equity (characterized by higher growth, less cash, and higher leverage). We demonstrate that a firms decision to increase communication results in a reduction of information asymmetry that enables them to issue seasoned equities with a higher probability and lower costs. We further document that the previously observed negative market reaction to SEO announcements is attributed only to low-disclosure firms; highdisclosure SEO firms experience no significant adverse market reaction.
James Ang Yingmei Cheng
College of Business,Florida State University,Tallahassee,Florida 32306
国际会议
大连
英文
1-60
2008-07-02（万方平台首次上网日期，不代表论文的发表时间）