Public signals and the equilibrium allocation of private information
Article Abstract:
The allocation of private informaion is determined to an extent by public signals in the presence of informative prices. The release of public signals tends to bring about a concentrated allocation of private signals wherein a small group of traders possess private information, while other traders are left uninformed. Concentration results from the willingness of a trader, originally possessing one private signal value, to purchase the remaining private signal at a higher price. The trader's willingness to purchase is ruled by two balancing forces. The first points to the possibility of decreasing returns as a result of increased precision. The second force illustrates the complementarity of precision and the increased informativenes resulting from two private signals utilized together.
Publication Name: Journal of Accounting Research
Subject: Business
ISSN: 0021-8456
Year: 1991
User Contributions:
Comment about this article or add new information about this topic:
Price-signal relations in the presence of correlated public and private information
Article Abstract:
The notion that improved news stimulates higher prices can fail when mistakes on private and public information signals are adequately correlated. The relation which a researcher finds between prices and information signals will generally depend on the way in which other variables in the economy are treated. Some interesting information acquisition issues are raised by the potential for highly correlated data to cut traders' posterior variance about the future worth of the asset.
Publication Name: Journal of Accounting Research
Subject: Business
ISSN: 0021-8456
Year: 1988
User Contributions:
Comment about this article or add new information about this topic:
The extreme future stock returns following I/B/E/S earnings surprise
Article Abstract:
Financial earnings projections and persistency of unexpected earnings for more than three years is evaluated.
Publication Name: Journal of Accounting Research
Subject: Business
ISSN: 0021-8456
Year: 2006
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Liquidity and market structure. Equilibrium analysis of portfolio insurance. Margin regulation and stock market volatility
- Abstracts: On choosing the appropriate measure of association when analyzing rating scale data. Analyzing interpersonal communications in industrial marketing negotiations
- Abstracts: Realised profits and the cash test. Risk and the role of the APC. Cash flow statements: the transatlantic effect
- Abstracts: Administration: taxing consequences. Retention of a title: a practical guide. The pre-insolvency troubleshooter
- Abstracts: Discussion of a model of two-tiered financial reporting. Trading volume and price reactions to public announcements