Strategic information aggregation and learning from prices

Pedraza, Alvaro,(2019), Strategic information aggregation and learning from prices. , Journal of Corporate Finance, UNSPECIFIED

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This paper studies firms' learning from stock prices and corporate investment when managers have different precisions about their investment opportunities. When informed traders and firm managers are strategic, private information is not fully incorporated into stock prices. Moreover, informed trading volume is low for firms with low quality of managerial information, leading to limited learning. Using a sample of U.S. publicly traded companies, the paper documents a positive correlation between the quality of managerial information and price informativeness. Furthermore, consistent with model predictions, the relation between managerial information and investment sensitivity to prices follows an inverse U-shape pattern.
Keywords : Corporate investment Informed trading Strategic interactions, UNSPECIFIED
Journal or Publication Title: Journal of Corporate Finance
Volume: 58
Item Type: Article
Subjects: Manajemen
Depositing User: Yuwono Yuwono
Date Deposited: 19 Dec 2019 09:14
Last Modified: 19 Dec 2019 09:14

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