On the synergy between disclosure and investment beauty contests

• Autores: Anil Arya, Brian Mittendorf
• Localización: Journal of accounting and economics, ISSN 0165-4101, Vol. 61, Nº. 2-3, 2016, págs. 255-273
• Idioma: inglés
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• Resumen

  • Abstract Many investments are noted for their "beauty contest" features in that decision makers desire conformity with others׳ choices due to inherent complementarities. This paper examines the incentives of firms to take preemptive action and publicly disclose their investments in such beauty contests. In this case, it is the beauty contest desire for coordination that incentivizes a firm to disclose because doing so allows it to convey information that establishes norms and thereby influence subsequent actions of others. Disclosure recipients too benefit from this arrangement because they access additional information on which to base their decisions.