Public disclosure with information sharing in financial market

Weijun Xu, Shiliang Pan, Yucheng Ji and Qi Zhao

Finance Research Letters, 2023, vol. 53, issue C

Abstract: We analyze a rational expectations equilibrium model that explores how information sharing among investors affects price volatility and firms’ disclosure quality. We derive closed-form expressions for the stock price and optimal disclosure quality as a function of network connectedness. We show that when investors are less risk-averse, price volatility will increase as information sharing among investors becomes more active, while managers will reduce the disclosure quality. When investors are more risk-averse, price volatility and disclosure quality both have a non-monotonous relationship with network connectedness. Our analysis highlights how technology, media, and capital market changes affect firms’ disclosure policies.

Keywords: Information sharing; Network connectedness; Public disclosure (search for similar items in EconPapers)
JEL-codes: G12 G14 M41 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:53:y:2023:i:c:s1544612323000260

DOI: 10.1016/j.frl.2023.103652

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