Some experimental evidence on the efficiency of dividend signaling in resolving information asymmetries

Article Abstract:

An experiment was conducted wherein managers of two firms make decisions regarding investments and dividends to optimize the value of their firms. Dividends are given to shareholders trading in both firms' shares. Unlike in control groups, where dividend and investment decisions are made exogenously to optimize the dividend signal's informational content, dividend surprises in the experimental market are not indicative of the information in earnings shocks. Moreover, firms having low return rates on investment lose earnings power because they underinvest, and managers ineffectively use dividend signals to inflate share prices.

Dividends, Investments

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Information assymetry, adverse selection and joint-ventures

Article Abstract:

An analysis of the interrelations among information assymetry, adverse selection and joint ventures is presented. The analysis considers a proposal which considers the superiority of joint venture organizations over markets and hierarchies under non-trivial costs of complementary asset valuation. Data from64 joint venture and 165 merger announcements are considered for the study. It is shown that cost reductions are generated by factoring shared ownership and control in transactions.

Economic aspects, Joint ventures

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Asymmetric information, accounting manipulations, and partnerships

Article Abstract:

Merged corporations are often characterized with enhanced market power, synergies and transaction optimal conditions. Such mergers are examined in terms of a signaling effect that defines entrepreneurial capacity, of accounting manipulation effects and of risk reduction effects. The three effects generate an equilibrium model where firms of similar capacity merge, while firms with diverse capacities have no incentive to merge.

Acquisitions and mergers, Partnership, Partnerships

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