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Investment Implications of Information Acquisition and Leakage

Author

Listed:
  • Ronald A. Dye

    (Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, Illinois 60208-2002)

  • Sri S. Sridhar

    (Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, Illinois 60208-2002)

Abstract

This paper studies when a firm will acquire additional information about a potential new project by consulting outsiders, when doing so runs the risk of reducing the value of implementing the project as a consequence of information leakage. The analysis evaluates the firm's information acquisition activities in both the presence and absence of moral hazard in project production.

Suggested Citation

  • Ronald A. Dye & Sri S. Sridhar, 2003. "Investment Implications of Information Acquisition and Leakage," Management Science, INFORMS, vol. 49(6), pages 767-783, June.
    • Handle: RePEc:inm:ormnsc:v:49:y:2003:i:6:p:767-783
    DOI: 10.1287/mnsc.49.6.767.16029
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    References listed on IDEAS

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    1. Richard A. Lambert, 1986. "Executive Effort and Selection of Risky Projects," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 77-88, Spring.
    2. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-180, January.
    3. Rick Antle & Gary D. Eppen, 1985. "Capital Rationing and Organizational Slack in Capital Budgeting," Management Science, INFORMS, vol. 31(2), pages 163-174, February.
    4. Douglas Gale & Martin Hellwig, 1985. "Incentive-Compatible Debt Contracts: The One-Period Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(4), pages 647-663.
    5. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
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    Citations

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    Cited by:

    1. Krishnan S. Anand & Manu Goyal, 2009. "Strategic Information Management Under Leakage in a Supply Chain," Management Science, INFORMS, vol. 55(3), pages 438-452, March.
    2. Ashish Arora & Andrea Fosfuri, 2005. "Pricing Diagnostic Information," Management Science, INFORMS, vol. 51(7), pages 1092-1100, July.
    3. Anna Faelten & Miles Gietzmann & Valeriya Vitkova, 2015. "Learning from your investors: can the geographical composition of institutional investors affect the chance of success in international M&A deals?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(1), pages 47-69, February.
    4. Kim Hua Tan & W. P. Wong & Leanne Chung, 2016. "Information and Knowledge Leakage in Supply Chain," Information Systems Frontiers, Springer, vol. 18(3), pages 621-638, June.

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