Investors' information acquisition and the manager's value-risk tradeoff

• 成果类型: Article
• 署名作者: Xue, Hao
• 署名单位: Duke University
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-024-09839-3
• 发表日期: 2025
• 页码: 776-812
• 关键词: market liquidity; disclosure; FIRMS; cost; INVESTMENT; governance; reduction

摘要

This paper studies a model in which investors' information acquisition and the manager's investment choice (hence the moments of the firm's cash flow) are jointly determined. I show that a lower information acquisition cost alters the information environment in a way that motivates the manager to prioritize reducing the variance of cash flow over improving its mean. I present conditions under which a decrease in the cost of information acquisition reduces stock valuations and investors' welfare. The analysis highlights the importance of considering the joint determination of firm risk in studying investors' information acquisition. The model's predictions are relevant to the growing literature that studies technological advancements and regulatory requirements that lower the cost for investors to acquire and process information.