In a world of asymmetric information, it is shown that firms need to convey information to the market about the qualit y of their earnings streams. This effort to mitigate the adverse selection problem in financial markets results in a bias in project selection that has a myopic characteristic. The result is developed. in a simple model. It is contrasted with alternative explanations of short-termism that invoke earnings distortion by management to misle ad a market perceived to be myopic. The robustness of the result to the introduction of partially informative cash flows and alternative mechanisms for conveying information is also discussed. Copyright 1993 by The editors of the Scandinavian Journal of Economics.
Download Info
To our knowledge, this item is not available for
download. To find whether it is available, there are three
options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page
whether it is in fact available.
3. Perform a search for a similarly titled item that would be
available.