TY  - UNPD
A1  - Di Maggio, Marco
A1  - Pagano, Marco
T1  - Financial disclosure and market transparency with costly information processing
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 485
N2  - We study a model where some investors ("hedgers") are bad at information processing, while others ("speculators") have superior information-processing ability and trade purely to exploit it. The disclosure of financial information induces a trade externality: if speculators refrain from trading, hedgers do the same, depressing the asset price. Market transparency reinforces this mechanism, by making speculators' trades more visible to hedgers. As a consequence, issuers will oppose both the disclosure of fundamentals and trading transparency. Issuers may either under- or over-provide information compared to the socially efficient level if speculators have more bargaining power than hedgers, while they never under-provide it otherwise. When hedgers have low financial literacy, forbidding their access to the market may be socially efficient.
T3  - CFS working paper series - 485 
KW  - disclosure
KW  - transparency
KW  - financial literacy
KW  - limited attention
KW  - OTC markets
Y1  - 2014
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/35308
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-353087
UR  - http://ssrn.com/abstract=2517287
IS  - August 18, 2014
PB  - Center for Financial Studies
CY  - Frankfurt, M.
ER  -