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Full-Text Articles in Social and Behavioral Sciences
Indescribability And Asymmetric Information At The Contracting Stage, Takashi Kunimoto
Indescribability And Asymmetric Information At The Contracting Stage, Takashi Kunimoto
Research Collection School Of Economics
Maskin and Tirole [Maskin, E., Tirole, J., 1999. Unforeseen contingencies and incomplete contracts. Review of Economic Studies, 66, 83–114] show that indescribability does not matter for contractual incompleteness when there is symmetric information both at the contracting stage and at the trading stage. Following their setup, I show that with asymmetric information at both stages, indescribability can matter.
Asymmetric Information And Conglomerate Discount: Evidence From Spinoffs, Charlie Charoenwong, Kuan Yong David Ding, Jing Pan
Asymmetric Information And Conglomerate Discount: Evidence From Spinoffs, Charlie Charoenwong, Kuan Yong David Ding, Jing Pan
Research Collection Lee Kong Chian School Of Business
The existing literature argues that diversified firms may be undervalued due to the information asymmetry between a firm's management and the market. Splitting the firm's divisions into multiple business components is thought to facilitate the market valuation of each component more accurately. We investigate the information hypothesis from corporate spinoffs from 1981 through 2004. We use the post-spinoff data to reconstruct the diversified firm, assess the improvement in value at the combined firm level, and relate the value improvement to the change in the level of information asymmetry. We find that, prior to the spinoff, the sample firms have significantly …