2010
DOI: 10.1016/j.jbankfin.2009.06.016
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Equity issues and temporal variation in information asymmetry

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Cited by 44 publications
(25 citation statements)
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“…An argument that is used to explain this result states that wellperforming companies in terms of CSR are more transparent, and thus less prone to information asymmetry between managers and investors. Indeed, several analyses underline that a high level of information asymmetry leads to a high cost of equity which in turn pushes firms toward debt financing (Myers and Majluf 1984;Bharath et al 2009;Autore and Kovacs 2010). As such, we may argue that the most indebted corporate sponsors decide to create a SR fund in order to improve their extra-financial performance and thus reduce the information asymmetry between managers and investors.…”
Section: Empirical Evidencementioning
confidence: 99%
“…An argument that is used to explain this result states that wellperforming companies in terms of CSR are more transparent, and thus less prone to information asymmetry between managers and investors. Indeed, several analyses underline that a high level of information asymmetry leads to a high cost of equity which in turn pushes firms toward debt financing (Myers and Majluf 1984;Bharath et al 2009;Autore and Kovacs 2010). As such, we may argue that the most indebted corporate sponsors decide to create a SR fund in order to improve their extra-financial performance and thus reduce the information asymmetry between managers and investors.…”
Section: Empirical Evidencementioning
confidence: 99%
“…One strand of the literature provides evidence for a dynamic version of the pecking order theory (related to Hypothesis 1). Bharat et al (2008) and Autore and Kovacs (2010) document that firms prefer to access financial markets and issue equity when the level of information asymmetry is low. Similarly, Krishnaswami and Yaman (2007) study windows of opportunity in debt issues.…”
Section: Related Literaturementioning
confidence: 99%
“…Finally, Autore and Kovacs (2010) document that firms avoid to raise external funds in states with a high dispersion of analysts' forecasts.…”
Section: Measures Of Information Asymmetrymentioning
confidence: 99%
“…Autore and Kovacs (2010), for example, find that firms with high information asymmetry could benefit the most by issuing equity when the amount of asymmetric information is temporarily low.10 Hertzel and Smith (1993) argue that when the value of the firm is more difficult to assess and the degree of uncertainty about firm value is high, investors in private placements will expend more resources to determine the true value, and will require larger discounts. If investment opportunities are more difficult to value than existing assets, it follows that discounts will be larger when placement size is large relative to firm size.11 We also use size and industry and size as matched firms.…”
mentioning
confidence: 99%