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Discussion: Asymmetric Information, Signaling, and Optimal Corporate Financial Decisions

Published online by Cambridge University Press:  06 April 2009

Gordon Sick
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Extract

This paper generalizes the past signaling literature from one variable to many. Multivariate models have been studied in the general rational expectations literature (e.g., Allen [1], Kraus and Sick [3]), but this appears to be the first multivariate signaling application. (Here, I distinguish signaling from rational expectations literature by the fact that agents may attempt to promulgate, suppress, or add noise to signals.) Talmor studies signaling models which are fully revealing (i.e., for which, in equilibrium, the values of the signaled parameters are correct).

Information

Type
Financial Theory
Information
Journal of Financial and Quantitative Analysis , Volume 16 , Issue 4 , November 1981 , pp. 437 - 438
Copyright
Copyright © School of Business Administration, University of Washington 1981

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References

REFERENCES

[1]Allen, B. “Generic Existence of Completely Revealing Equilibria for Economies with Uncertainty When Prices Convey Information.” Dept. of Economics, University of Pennsylvania (1978).Google Scholar
[2]Bhattacharya, S. “Imperfect Information, Dividend Policy and the ‘Bird in Hand’ Fallacy.” Bell Journal of Economics (1979), pp. 259–270.CrossRefGoogle Scholar
[3]Kraus, A., and Sick, G.. “Distinguishing Beliefs and Preferences in Equilibrium Prices.” Journal of Finance, Vol. 35 (1980), pp. 335–344.CrossRefGoogle Scholar
[4]Ross, S. “The Determination of Financial Structure: the Incentive-Signaling Approach.” Bell Journal of Economics (1977), pp. 23–40.CrossRefGoogle Scholar