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Informational Feedback Effect, Adverse Selection, and the Optimal Disclosure Policy
Social Science Research Network
Trading in a secondary stock market not only redistributes wealth among investors but also generates information that guides subsequent real decisions. We provide a disclosure model that re ‡ects both functions of the secondary market. By partially preempting traders' information advantage established from information acquisition, disclosure reduces incentives for private information acquisition. The resulting reduction in information acquisition has two opposite e¤ects on ...rm value. On onedoi:10.2139/ssrn.1780462 fatcat:5f4kt3d4hrefve6g2knaqhyqv4