The Role of Asymmetric Disclosure When Price Efficiency Affects Real Efficiency

Download or read book The Role of Asymmetric Disclosure When Price Efficiency Affects Real Efficiency written by Qi Chen and published by . This book was released on 2018 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the effects of asymmetric disclosure of good and bad news on price We examine the effects of asymmetric disclosure of good vs. bad news on price informativeness when prices provide useful information to assist firms' investment decisions. We find that more timely disclosure of negative news encourages speculators to trade on their private information which in turn improves the efficiency of firms' investment decisions. We also identify conditions under which the preferences for timely loss disclosure differ between a firm whose objective is to maximize ex ante firm value and a social planner whose objective is to maximize investment efficiency. Our analysis provides an alternative economic explanation for asymmetric timeliness in accounting disclosure.