Cornell University

Central Campus

#CornellEcon
View map Free Event

Liyan Yang - University of Toronto (visiting Johns Hopkins University)

Disclosure, Competition, and Learning from Asset Prices

Abstract:  I study voluntary disclosure of duopoly firms when they learn information from asset prices. By disclosing information, a firm incurs a cost of losing competitive advantage to its rival firm but benefits from learning from a more informative asset market. Three types of equilibrium arise: nondisclosure, partial disclosure, and full disclosure. In a partial disclosure equilibrium, price informativeness and firm profits increase with the size of noise trading in the financial market. In the other two types of equilibrium, the opposite is true.  Firms’ disclosure decisions can exhibit strategic complementarity, leading to both a disclosure equilibrium and a nondisclosure equilibrium.

1 person is interested in this event