Financial reporting and market efficiency with extrapolative investors
Milo Bianchi
(1)
,
Philippe Jehiel
(2, 3)
Philippe Jehiel
- Fonction : Auteur
- PersonId : 1151454
Résumé
We model a financial market in which companies engage in strategic financial reporting knowing that investors only pay attention to a randomly drawn sample from firms' reports and extrapolate from this sample. We investigate the extent to which stock prices differ from the fundamental values, assuming that companies must report all their activities but are otherwise free to disaggregate their reports as they wish. We show that no matter how large the samples considered by investors are, a monopolist can induce a price of its stock bounded away from the fundamental. Besides, increasing the number of companies competing to attract investors may exacerbate the mispricing of stocks.
Domaines
Economies et financesFormat du dépôt | Notice |
---|---|
Type de dépôt | Article dans une revue |
Résumé |
en
We model a financial market in which companies engage in strategic financial reporting knowing that investors only pay attention to a randomly drawn sample from firms' reports and extrapolate from this sample. We investigate the extent to which stock prices differ from the fundamental values, assuming that companies must report all their activities but are otherwise free to disaggregate their reports as they wish. We show that no matter how large the samples considered by investors are, a monopolist can induce a price of its stock bounded away from the fundamental. Besides, increasing the number of companies competing to attract investors may exacerbate the mispricing of stocks.
|
Titre |
en
Financial reporting and market efficiency with extrapolative investors
|
Auteur(s) |
Milo Bianchi
1
, Philippe Jehiel
2, 3
1
DRM -
Dauphine Recherches en Management
( 1032 )
- Place du Maréchal de Lattre de Tassigny 75775 Paris Cedex 16
- France
2
PSE -
Paris-Jourdan Sciences Economiques
( 139754 )
- 48 boulevard Jourdan 75014 Paris
- France
3
PSE -
Paris School of Economics
( 301309 )
- 48 boulevard Jourdan 75014 Paris
- France
|
Page/Identifiant |
842–878
|
Comité de lecture |
Oui
|
Audience |
Internationale
|
Date de publication |
2015-05
|
Volume |
157
|
Nom de la revue |
|
Vulgarisation |
Non
|
Langue du document |
Anglais
|
Projet(s) Européen(s) |
|
Public visé |
Scientifique
|
Sous-type de document pour les Articles |
Research article
|
Mots-clés (JEL) |
|
Domaine(s) |
|
Financement |
|
Voir aussi |
|
Mots-clés |
en
Financial reporting, Extrapolation, Efficient market hypothesis, Competition, Sophistication
|
DOI | 10.1016/j.jet.2015.02.009 |
ProdINRA | 312604 |
UT key WOS | 000354593000034 |
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