We study the optimal disclosure policy of a firm that wishes to maximize its expected stock price in the classic setting in which its stock is traded by risk-averse investors and noise traders. We find that the optimal disclosure policy is imprecise and leads to skewed posterior beliefs. This...

Central banks have become increasingly communicative. An important reason is that democratic societies expect more transparency from public institutions. Central bankers, based on empirical research, also believe that sharing information has economic benefits. Communication is seen as a way to...

Central banks have become increasingly communicative. An important reason is that democratic societies expect more transparency from public institutions. Central bankers, based on empirical research, also believe that sharing information has economic benefits. Communication is seen as a way to...

In a multi-asset market where agents have both payoff and supply signals, the rational expectations equilibria with partially revealing prices are characterized by an algebraic Riccati equation. The equation states that asset prices’ payoff informativeness equals the aggregation of...

Information disclosure is an essential component of regulation in financial markets. In this article, we provide a cohesive analytical framework to review a few key channels through which disclosure in financial markets affects market quality, information production, efficiency of real...

How effectively does a decentralized marketplace aggregate information that is dispersed throughout the economy? We study this question in a dynamic setting where sellers have private information that is correlated with an unobservable aggregate state. In any equilibrium, each seller's trading...

We develop a model of dealer-intermediated over-the-counter (OTC) markets in which customers choose their relationship dealers and dealers choose their levels of expertise, thereby determining the market structure and price informativeness jointly. We find that, in general, multiple equilibria...

This paper studies information sharing between strategic investors who are privately informed about asset fundamental with different precision levels. We find that a coarsely informed investor would always share her information “as is” if her counterparty investor is well informed about the...

We consider a single-period, pure-exchange setting with a single trading date and a single consumption date. Investors are uncertain about the risk aversion of the other investors participating in the capital market, implying that the market's aggregate risk aversion is a random variable. Unlike...