When knowledge is power: Evidence from the municipal bond market

Christine Cuny

Journal of Accounting and Economics, 2018, vol. 65, issue 1, 109-128

Abstract: I investigate whether access to fundamental information enhances retail investors’ bargaining power, reducing the premium that small municipal bond investors pay over large investors. I find a reduction in this small trade premium after the introduction of an online disclosure repository that lowers retail investors’ information acquisition costs. This finding is limited to issuers whose disclosures are disseminated through the repository. The finding is pronounced for issuers that impose high information acquisition costs on investors ex-ante and those that exhibit high disclosure quality ex-post. These results suggest that as investors’ information sets align, so does their bargaining power with dealers.

Keywords: Dealer markets; Municipal debt; Information asymmetry; Asymmetric bargaining power; Dissemination (search for similar items in EconPapers)
JEL-codes: D43 D82 D83 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:65:y:2018:i:1:p:109-128

DOI: 10.1016/j.jacceco.2017.11.002

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