Markets versus Mechanisms

• 成果类型: Article
• 署名作者: Boleslavsky, Raphael; Hennessy, Christopher A.; Kelly, David L.
• 署名单位: University of Miami; University of London; London Business School
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhab131
• 发表日期: 2022
• 页码: 3139
• 关键词: Adverse selection; INFORMATION; performance; governance; OWNERSHIP; CONTRACTS; liquidity; feedback; DESIGN; firm

摘要

We establish limitations to the usage of direct revelation mechanisms (DRMs) by corporations seeking decision-relevant information in economies with securities markets. In this environment, posting a DRM increases the informed agent's outside option: if the agent rejects the DRM, he convinces the market he is uninformed, and he can aggressively trade with low price impact, thereby generating large (off-equilibrium) trading gains. This endogenous outside option may make using a DRM to screen uninformed agents impossible. When screening is possible, solely relying on the market for information is optimal if the increase in outside option is sufficiently large.