Voluntary information disclosure with heterogeneous beliefs

Xia Liu, Shanchun Liu, Lei Lu, Yongdong Shi and Xiong Xiong

Journal of Economic Dynamics and Control, 2021, vol. 124, issue C

Abstract: We present a model in which an insider (i.e., manager or CEO) and an informed outsider (i.e., financial analyst or professional) have heterogeneous beliefs on their shared information about a risky asset and analyze the insider's incentive to voluntarily disclose this information to the public. We find that with heterogeneous beliefs the insider and informed outsider exploit their shared information differently and this might give rise to the insider's voluntary disclosure of this shared information to the public to seek excess profits. Specifically, the insider is more likely to release the information to the public when she has a greater relative information advantage than the informed outsider and that the informed outsider is more optimistic in the shared information. Our findings shed light on why some firm insiders prefer to trade against informed outsiders while others prefer to drive informed outsiders out of trading through voluntary disclosure.

Keywords: Heterogeneous beliefs; Shared information; Voluntary disclosure (search for similar items in EconPapers)
JEL-codes: D8 G1 G2 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165188921000166
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:124:y:2021:i:c:s0165188921000166

DOI: 10.1016/j.jedc.2021.104081

Access Statistics for this article

Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok

More articles in Journal of Economic Dynamics and Control from Elsevier
Bibliographic data for series maintained by Catherine Liu ().