Get 20M+ Full-Text Papers For Less Than $1.50/day. Subscribe now for You or Your Team.

Learn More →

The market for information—evidence from finance directors, analysts and fund managers

The market for information—evidence from finance directors, analysts and fund managers Abstract The theoretical distinction between information efficiency and fundamental efficiency suggests an important question for accounting research, which is whether (and to what extent) there exists an equilibrium mechanism whereby fund managers investment decisions can be fully informed. This question is approached in this paper by means of developing a grounded theory of the market for information. The theory is derived from a (mostly interview-based) empirical analysis of the economic incentives of finance directors, analysts and fund managers with respect to stock market information flows. The evidence suggests a two-part theory. First, it is argued that ‘raw’ data flowing directly from companies is of considerably greater importance to fund managers than ‘processed’ data generated by analysts. Second, analysts are nevertheless argued to play an important role in the market for information, as both mechanisms of information efficiency and as providers of benchmarks for consensus valuation. This theory implies that the research literature has paid insufficient attention to the role of accounting information in direct communication between companies and fund managers and, related to this, that the role of analysts in share price determination has been overstated and only superficially understood. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting and Business Research Taylor & Francis

The market for information—evidence from finance directors, analysts and fund managers

Accounting and Business Research , Volume 29 (1): 18 – Dec 1, 1998
18 pages

Loading next page...
 
/lp/taylor-francis/the-market-for-information-evidence-from-finance-directors-analysts-VuTGX6Xce4

References (26)

Publisher
Taylor & Francis
Copyright
Copyright Taylor & Francis Group, LLC
ISSN
2159-4260
eISSN
0001-4788
DOI
10.1080/00014788.1998.9729563
Publisher site
See Article on Publisher Site

Abstract

Abstract The theoretical distinction between information efficiency and fundamental efficiency suggests an important question for accounting research, which is whether (and to what extent) there exists an equilibrium mechanism whereby fund managers investment decisions can be fully informed. This question is approached in this paper by means of developing a grounded theory of the market for information. The theory is derived from a (mostly interview-based) empirical analysis of the economic incentives of finance directors, analysts and fund managers with respect to stock market information flows. The evidence suggests a two-part theory. First, it is argued that ‘raw’ data flowing directly from companies is of considerably greater importance to fund managers than ‘processed’ data generated by analysts. Second, analysts are nevertheless argued to play an important role in the market for information, as both mechanisms of information efficiency and as providers of benchmarks for consensus valuation. This theory implies that the research literature has paid insufficient attention to the role of accounting information in direct communication between companies and fund managers and, related to this, that the role of analysts in share price determination has been overstated and only superficially understood.

Journal

Accounting and Business ResearchTaylor & Francis

Published: Dec 1, 1998

There are no references for this article.