Information design and capital formation

• 成果类型: Article
• 署名作者: Carvajal, Andres; Rostek, Marzena; Sublet, Guillaume
• 署名单位: University of California System; University of California Davis; Getulio Vargas Foundation; University of Wisconsin System; University of Wisconsin Madison; Universite de Montreal; University of Minnesota System; University of Minnesota Twin Cities
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2018.03.004
• 发表日期: 2018
• 页码: 255-292
• 关键词: Information disclosure; information design; value of information; Financial regulation; Crowdfunding; initial public offerings

摘要

Could a firm benefit from not disclosing all of its private information before its stock is traded in public financial markets? So long as the investors' marginal utility function is convex and the investors differ only in their risk-sharing needs, three substantive results hold: (1) a full disclosure policy minimizes the value of the firm; (2) lifting a mandate of full disclosure does not imply that firms will necessarily choose to withhold information maximally; and (3) with many firms that strategically choose disclosure policies, all Nash equilibria display only partial disclosure. Our insight is based on the role that the firm's equity can play as a risk-sharing device: if the firm chooses to keep some information private, its stock can be used by investors to hedge against risk. The problem that we study is of theoretical interest, but it is also topical: the Jumpstart Our Business Startups (JOBS) Act, which was signed into law in April 2012, substantially eases securities regulations for small companies going public. The declared intent of this change in regulation was to promote capital formation in new and small companies. Our results indicate that the provisions of this new legislation are in line with its intentions. Less stringent requirements on information disclosure for smaller firms may also benefit investors. (C) 2018 Elsevier Inc. All rights reserved.