News Management and the Value of Firms
The literature on asymmetric information has been concerned mainly with the problem of the informed party lying to the uninformed parties. However, in many cases, the informed party will stop short of lying but will seek to gain from private information by managing the disclosure of news. This article examines the pricing of a firm when there is such manipulation of news. I model this situation as a variant of the "persuasion game" of Milgrom and Roberts (1986) in which I can parameterize the notion of the degree of credence placed by the market on the disclosures of the informed party . An empirical hypothesis thrown up by the theory is that for otherwise identical firms, a low price/earnings ratio will be associated with a greater degree of positive skewness of the disclosure strategy.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 25 (1994)
Issue (Month): 1 (Spring)
|Contact details of provider:|| Web page: http://www.rje.org|
|Order Information:||Web: https://editorialexpress.com/cgi-bin/rje_online.cgi|
When requesting a correction, please mention this item's handle: RePEc:rje:randje:v:25:y:1994:i:spring:p:58-71. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.