We study the relative usefulness of earnings announcements for valuation from the perspective of information externalities–the use of peer information in IPO pricing. The relative usefulness of an information source for peer valuation is a function of both the amount and the per-unit...

It has been well-established that both stock prices and accounting earnings are used to evaluate and compensate CEOs. Prior studies often interpret the higher sensitivity of compensation revisions to stock prices (relative to accounting earnings) as the superior role of price formation versus...