eCommons

 

Essays On Information Asymmetry In Equity Market

Other Titles

Author(s)

Abstract

Information asymmetry is a common phenomenon everywhere. This dissertation studies this phenomenon through observing the equity market both in the developed country and in the emerging market and observing both the initial price offering market and the secondary equity market. Chapter one develops a simple model that relates the clustering of IPOs to moral hazard. The number of IPOs in the economy is shown to be a decreasing function of agency costs. The paper uses a framework in which agency costs linked to entrepreneur net worth are related to the business cycle. It is shown that when business activity is high(low), agency costs from moral hazard are low(high). Then, our model yields the stylized fact that the number of IPOs is highest around equity prices' peaks. Based on the data from 1970 to 2008, it is found that the current ratio, the quick ratio, and the cash ratio are positively related to the number of IPOs in the economy, and that the number of bankruptcy filings is negatively related to the number of IPOs in the economy. Chapter two studies a phenomenon in China's stock market. Listed firms bought and sold other listed firms in 2007 when the market was booming so that their net earnings were boosted. The paper finds that those that participated in these stock transactions and relied heavily on these earnings in 2007 benefited from the booming stock market and had positive growth in investment income in 2007, which lead to positive growth in net earnings in 2007. These firms suffered from the declining stock market in 2008 and had a negative growth rate in investment net income in 2008 and, thus, a negative growth rate in net earnings. This earnings reversal is proved by the smaller earnings persistence of investment net income than that of main operating income. The stock price acts as if investors correctly understand the information in the main operating income and the investment net income jointly.

Journal / Series

Volume & Issue

Description

Sponsorship

Date Issued

2010-10-20

Publisher

Keywords

Location

Effective Date

Expiration Date

Sector

Employer

Union

Union Local

NAICS

Number of Workers

Committee Chair

Committee Co-Chair

Committee Member

Degree Discipline

Degree Name

Degree Level

Related Version

Related DOI

Related To

Related Part

Based on Related Item

Has Other Format(s)

Part of Related Item

Related To

Related Publication(s)

Link(s) to Related Publication(s)

References

Link(s) to Reference(s)

Previously Published As

Government Document

ISBN

ISMN

ISSN

Other Identifiers

Rights

Rights URI

Types

dissertation or thesis

Accessibility Feature

Accessibility Hazard

Accessibility Summary

Link(s) to Catalog Record