The effect of asymmetric information on product market outcomes

• 成果类型: Article
• 署名作者: Billett, Matthew T.; Garfinkel, Jon A.; Yu, Miaomiao
• 署名单位: Indiana University System; IU Kelley School of Business; Indiana University Bloomington; University of Iowa; University of Saskatchewan
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2016.11.001
• 发表日期: 2017
• 页码: 357-376
• 关键词: Asymmetric information; analysts; market share

摘要

We explore how asymmetric information in financial markets affects outcomes in product markets. Difference-in-difference tests around brokerage house merger/closure events (which increase asymmetric information through reductions in analyst coverage) indicate worse industry-adjusted sales growth for shocked firms than for their peers. Our results are consistent with Bolton and Scharfstein's (1990) tradeoff between investor agency concerns and predation risk. Further support is found in stronger treatment effects among firms with ex ante greater agency concerns, financing constraints, asymmetric information, and those operating in ex ante more competitive (fluid) product market spaces. Our results are concentrated in industries where we can clearly identify either net firm entry or exit. (C) 2016 Elsevier B.V. All rights reserved.