Necessary and Sufficient Conditions for Achieving Stockholder Unanimity over the Production of Information

Brett Titman

University of California at Los Angeles, Anderson Graduate School of Management from Anderson Graduate School of Management, UCLA

Abstract: The conditions under which stockholders will be unanimous in the choice of their firm's plan for the production of goods are well-known: no technological externalities, a competitive market in the production of goods, and spanning of the marginal returns of the production process by existing securities in the marketplace. However, not well-known are the conditions which give stockholder unanimity over the amount of information that the firm should produce. It is shown here that even if the conditions giving unanimity in the production of goods are satisfied, the additional conditions of homogenous beliefs and risk neutral behavior are necessary to achieve unanimity in the production of information.

Date: 1982-09-01
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