Incentivizing Effort and Informing Investment: The Dual Role of Stock Prices

• 成果类型: Article; Early Access
• 署名作者: Banerjee, Snehal; Davis, Jesse; Gondhi, Naveen
• 署名单位: University of Michigan System; University of Michigan; University of North Carolina; University of North Carolina Chapel Hill; INSEAD Business School
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454; 1465-7368
• DOI: 10.1093/rfs/hhag008
• 发表日期: 2026-04-10
• 关键词: D8; g1; managerial incentives; financial-markets; INFORMATION; EFFICIENCY; liquidity; COMPENSATION; COMPETITION; disclosure; mergers

摘要

Stock prices aggregate investor information about investment opportunities and reflect managerial performance. These dual roles may be in tension: when prices are more informative about investment opportunities, they may be less effective at incentivizing managerial effort. This tradeoff has novel consequences. Lower information costs can lead to both more efficient investment but lower firm value. The principal may strictly prefer to delegate investment to a manager who has no informational advantage and makes ex-post inefficient choices. Investment in diversifying and (ex-ante) negative NPV projects mitigate agency problems. Finally, standard measures of price efficiency provide an incomplete picture of firm value.