Pricing, issuance volume, and design of innovative securities: The role of investor information

This study investigates the role of asymmetric information for the pricing, issuance volume, and design of innovative securities. By analyzing the information that structured product issuers provide to the investors of those products, we can identify specific sources of asymmetric information betwee...

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Veröffentlicht in:Journal of financial intermediation 2023-07, Vol.55, p.101041, Article 101041
Hauptverfasser: Ammann, Manuel, Arnold, Marc, Straumann, Simon
Format: Artikel
Sprache:eng
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Zusammenfassung:This study investigates the role of asymmetric information for the pricing, issuance volume, and design of innovative securities. By analyzing the information that structured product issuers provide to the investors of those products, we can identify specific sources of asymmetric information between the issuers and investors in this market. We show that issuers exploit this information friction to offer products to investors that appear more profitable for the issuer. In addition, we find that the friction induces issuers to design products with higher information asymmetry. Our results suggest that product issuers’ behavior increases information frictions in the financial system.
ISSN:1042-9573
1096-0473
DOI:10.1016/j.jfi.2023.101041