Pricing, issuance volume, and design of innovative securities: The role of investor information

Manuel Ammann, Marc Arnold and Simon Straumann

Journal of Financial Intermediation, 2023, vol. 55, issue C

Abstract: This study investigates the role of asymmetric information for the pricing, issuance volume, and design of innovative securities. By analyzing the information that structured product issuers provide to the investors of those products, we can identify specific sources of asymmetric information between the issuers and investors in this market. We show that issuers exploit this information friction to offer products to investors that appear more profitable for the issuer. In addition, we find that the friction induces issuers to design products with higher information asymmetry. Our results suggest that product issuers’ behavior increases information frictions in the financial system.

Keywords: Structured products; Investor information; Financial innovation (search for similar items in EconPapers)
JEL-codes: D8 G34 M52 (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:jfinin:v:55:y:2023:i:c:s1042957323000244

DOI: 10.1016/j.jfi.2023.101041

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