This study examines whether analyst coverage affects the informativeness of income smoothing. I find that income smoothing enhances earnings informativeness more greatly for firms with high analyst coverage than for firms with low analyst coverage. The results suggest that income smoothing more efficiently communicates private information to investors when firms are followed by more analysts, c...

This paper examines the preferences of foreign and dometic institutional investors in Indian stock markets. Foreign and domestic institutional investors both prefer larger, widely dispersed firms and do not chase returns. However, we find evidence of strong differences in the behaviour of foreign and domestic institutional investors. Foreign investors prefer to buy private, liquid, young and gl...

This paper aims to contribute to the understanding of the factors that determine fundraising and investment in the private equity market in Europe. These are analysed separately, since the lags faced in this activity determine the existence of two separate markets. As a result, private equity institutions deal with different agents, namely investors (fundraising) and firms (investment), whose l...

Government-sponsored auctions for production rights (e.g., license auctions, privatizations, etc.) shape the industry structure. Are there mechanisms that induce an efficient industry structure (at least when there are no positive costs to public funds)? The answer is “no” whenever firms have private information about both fixed and marginal costs. Our analysis also suggests that the second-bes...

In this paper we analyze the implementation of socially optimal mergers when the regulator is not informed about all parameters that determine social and private gains from potential mergers. We show that implementation requires a certain degree of agreement between social and private incentives. The most important example where this congruence is present is when the uncertainty refers to cost ...

Collusion with Private and Aggregate Information by Jim Y. Jin* This paper considers three linear asymmetric oligopoly models with (i) a representative consumer, (ii) horizontal differentiation and (iii) vertical differentiation. We show that firms could maximize the joint-profit only based on private and aggregate information. They can choose the “correct“ colluding prices without knowing the ...

We study how Chinese private entrepreneurs benefit from participating in politics. Using original hand-collected data on listed firms controlled by private entrepreneurs, we document a significant positive relationship between political participation and change in firm performance. We also provide evidence that the change in social status cannot explain the change in performance. We then identi...

This paper analyzes the effect of public R&D subsidies on firms’ private R&D investment per employee and new product sales in German manufacturing. Parametric and semiparametric two-step selection models are applied to this evaluation problem. The results show that the average treatment effect on the treated firms’ R&D intensity is positive. The estimated effects are robust with respect to the ...

What cartel agreements are possible when firms have private information about production costs? For private cost uncertainty we characterize the set of cartel agreements that can be supported, recognizing incentive and participation constraints. If defection results in either Cournot or Bertrand competition, the incentive problem in large cartels is severe enough to prevent the cartel from achi...

This study examines how the Chinese state-owned banks allocate loans to private firms. We find that the banks extend loans to financially healthier and better-governed firms, which implies that the banks use commercial judgments in this segment of the market. We also find that having the state as a minority owner helps firms obtain bank loans and this suggests that political connections play a ...