Do rating announcements reduce information asymmetries? We investigate the effect of rating disclosures on the volatility and liquidity of the US bond market. Although rating agencies' decisions often are anticipated by credit spread changes, we show that in the case of no regulatory change...

This working paper was written by Max Bruche (Humboldt University of Berlin) and John C.F. Kuong (INSEAD).We consider a model in which dealers intermediate trades between clients and provide immediacy, or, market liquidity. Dealers can exert unobservable effort to improve the chance of...

We consider an economy in which a lender finances loans to borrowers by issuing a securitized product to investors and in which the credit quality of the product can depend on whether the lender screens borrowers. In the presence of asymmetric information between the lender and investors...

We examine IPO and acquisition waves, exit choices, and pre-money valuations at exit for 7082 venture-backed private companies over the 19-year period from 1978 through 2006. Consistent with other literature, we hypothesize that levels of IPO and acquisition activity and the choice between IPO...

The Dodd-Frank Act (DFA) increased the liability of credit rating agencies amid the failure by rating agencies to discover fraud (Enron) and underestimation of the true riskiness (MBS,CDO). However, the effect of increased liability on the informational value of ratings is not clear-cut. On the...

This paper studies how security analysts use industry-level and firm-specific information in issuing firms' earnings forecasts. Analysts who use more (less) industry-level (firm-specific) information have less available resources and incentives to allocate effort towards costly firm-specific...

We consider a model where investors can invest directly or search for an asset manager, information about assets is costly, and managers charge an endogenous fee. The efficiency of asset prices is linked to the efficiency of the asset management market: if investors can find managers more...

In response to the increasing use of computer programs to process firm disclosures, this registered report develops a new measure of “scriptability” that reflects computerized, rather than human, information processing costs. We validate our measure using SEC filing‐derived data from prior...

We use the presence of a Wikipedia article for initial public offering (IPO) firms to test theories of information asymmetry and investor awareness. While we find limited support for the former, our results provide strong support for theories of investor awareness. Specifically, IPO firms with a...