skip to primary navigationskip to content
 

Research Seminar - A Theory of Income Smoothing When Insiders Know More Than Outsiders, by Bart Lambrecht

When May 03, 2012
from 12:00 PM to 01:30 PM
Where W4.05, CJBS
Contact Name
Add event to calendar vCal
iCal

"A Theory of Income Smoothing When Insiders Know More Than Outsiders"

Bart Lambrecht, Lancaster University

Abstract:

We consider a setting in which insiders have information about income that outside
shareholders do not, but property rights ensure that outside shareholders can enforce
a fair payout. To avoid intervention, insiders report income consistent with outsiders'
expectations based on publicly available information rather than true income, resulting
in an observed income and payout process that adjust partially and over time towards a
target. Insiders underproduce in an attempt not to unduly raise outsiders' expectations
about future income, a problem that is more severe the smaller is the inside ownership
and results in an \outside equity Laer curve" in that the total outside equity value is
an inverted U-shaped function of outsiders' ownership share. A disclosure environment
with adequate quality of independent auditing mitigates this problem, implying that
accounting quality can enhance investments, size of public stock markets and economic
growth.
J.E.L.: G32, G35, M41, M42, O43, D82, D92
Keywords: payout policy, asymmetric information, under-investment, accounting qual-
ity, nance and growth.

« February 2018 »
February
MoTuWeThFrSaSu
1234
567891011
12131415161718
19202122232425
262728

RSS Feed Latest news

Best Student Paper Award 2018 - registration is now open

Feb 02, 2018

For the last ten years, Cambridge Finance is offering its Best Student Paper Award. The award comprises a cash honorarium of £1,000 and a certificate is awarded to the author of the best student paper in finance presented during the 2017-2018 academic year.

View all news

Upcoming events

Cambridge Finance Workshop - Marco Bonomo

Mar 08, 2018

KH107(Keynes House), Cambridge Judge Business School, University of Cambridge

Cambridge Finance Workshop - Richard Sloan

May 03, 2018

Room W4.03, Cambridge Judge Business School

Previous events

Upcoming events