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Abstract: Innovation and Communication: Signaling with Partial Disclosure

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  • Bhattacharya, Sudipto
  • Ritter, Jay R.

Abstract

This paper (1) constructs a signaling model with a weaker existence condition than in most signaling models, (2) demonstrates that, using a popular model of innovation under uncertainty, an equilibrium signaling schedule exists for a broad range of boundary conditions and parameter values. These results are derived in a model of a firm possessing private information about an investment opportunity, where the firm issues new equity to finance the investment. The proprietary information cannot be explicitly disclosed to potential investors without also disclosing it to potential competitors, but if investors are unaware of the firm's prospects, shares will have to be issued at a price less than their “intrinsic†value.

Suggested Citation

  • Bhattacharya, Sudipto & Ritter, Jay R., 1980. "Abstract: Innovation and Communication: Signaling with Partial Disclosure," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 15(4), pages 853-854, November.
    • Handle: RePEc:cup:jfinqa:v:15:y:1980:i:04:p:853-854_01
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    Cited by:

    1. Yuming Zhang & Juanjuan Zhang & Zhang Cheng, 2021. "Stock Market Liberalization and Corporate Green Innovation: Evidence from China," IJERPH, MDPI, vol. 18(7), pages 1-22, March.
    2. Yuan, Rongli & Wen, Wen, 2018. "Managerial foreign experience and corporate innovation," Journal of Corporate Finance, Elsevier, vol. 48(C), pages 752-770.
    3. Jun Wen & Lingxiao Li & Xinxin Zhao & Chenyang Jiao & Wenjie Li, 2022. "How Government Size Expansion Can Affect Green Innovation—An Empirical Analysis of Data on Cross-Country Green Patent Filings," IJERPH, MDPI, vol. 19(12), pages 1-22, June.

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