Research seminars

When transparency improves, must prices reflect fundamentals better?

Finance

Speaker: Snehal Banerjee
Kellogg

21 May 2015


No. Regulation often mandates increased transparency to improve how informative prices are about fundamentals. We show that such policy can be counterproductive. We study the optimal decision of an investor who can choose to acquire costly information not only about asset fundamentals but also about the behavior of liquidity traders. We characterize how changing the cost of information acquisition affects the extent to which prices reflect fundamentals. When liquidity demand is price-dependent (i.e., driven by feedback trading), surprising results emerge: higher transparency, even if exclusively targeting fundamentals, can decrease price informativeness, while cheaper access to non-fundamental information can improve efficiency.

Finance

Speaker: Matthieu Bouvard
Desautels Faculty of Management

14 June 2018 - From 2:00 pm to 3:15 pm


Finance

Speaker: Mikhail Simutin
Rotman School of Management

7 June 2018 - From 2:00 pm to 3:15 pm


Finance

Speaker: Liyan Yang
Rotman School of Management

31 May 2018 - From 2:00 pm to 3:15 pm


Finance

Speaker: Anton Lines
Columbia Business School

24 May 2018 - From 2:00 pm to 3:15 pm


Finance

Speaker: Ian Martin
LSE

17 May 2018 - From 2:00 pm to 3:15 pm



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