Investor competition over information and the pricing of information asymmetry

Brian K. Akins, Tee Yong Ng, Rodrigo S. Verdi

Research output: Journal article publicationJournal articleAcademic researchpeer-review

66 Citations (Scopus)


Whether the information environment affects the cost of capital is a fundamental question in accounting and finance research. Relying on theories about competition between informed investors as well as the pricing of information asymmetry, we hypothesize a cross-sectional variation in the pricing of information asymmetry that is conditional on competition. We develop and validate empirical proxies for competition using the number and concentration of institutional investor ownership. Using these proxies, we find a lower pricing of information asymmetry when there is more competition. Overall, our results suggest that competition between informed investors has an important effect on how the information environment affects the cost of capital.
Original languageEnglish
Pages (from-to)35-58
Number of pages24
JournalAccounting Review
Issue number1
Publication statusPublished - 1 Jan 2012
Externally publishedYes


  • Asset pricing
  • Information quality
  • Information risk

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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