The Role of Soft and Hard Information in the Pricing of Assets and Contract Design - Evidence from Screenplay Sales

The Effects of Ambiguous Information on Initial and Subsequent IPO Returns

“…Goetzmann et al (2007) encounter a similar problem in their analysis of screenplays. Goetzmann et al (2007) encounter a similar problem in their analysis of screenplays.…”

“…These results support the view that soft information embeds ambiguity and that it influences investors' portfolio choices.The distinction between "hard" and "soft" information is gaining importance in financial research with increased focus on how soft information affects organizational structure and asset pricing (Stein, 2002;Peterson and Rajan, 2002;Goetzmann et al, 2007;Engelberg, 2008). These disclosures are examples of "soft" or ambiguous information.…”

“…The distinction between "hard" and "soft" information is gaining importance in financial research with increased focus on how soft information affects organizational structure and asset pricing (Stein, 2002;Peterson and Rajan, 2002;Goetzmann et al, 2007;Engelberg, 2008). Hard information is most often numerical, while soft information is generally textual and often admits different interpretations from different observers making it ambiguous.…”

“…To measure the degree of ambiguity in this text, we follow Goetzmann et al (2007), who use word counts from screenplay summaries to measure soft information. We focus on the risk factors section in these prospectuses.…”

“…This section discusses possible "bad" news that investors may face in the future. To measure the degree of ambiguity in this text, we follow Goetzmann et al (2007), who use word counts from screenplay summaries to measure soft information. To standardize these counts, we weight them by counts in other sections that contain harder information about the IPO.…”