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.

« September 2017 »
September
MoTuWeThFrSaSu
123
45678910
11121314151617
18192021222324
252627282930

RSS Feed Latest news

Best Student paper Award winners were announced on 16 June 2017

Jun 16, 2017

Winners of the 2016-2017 academic year competition were announced at the End of Term staff and student lunch, Cambridge Judge Business School

View all news

Upcoming events

Cambridge Finance Workshop - Hui Chen (Zurich)

Oct 12, 2017

Room W4.03, Cambridge Judge Business School

Cambridge Finance Workshop - Matt Elliott

Oct 26, 2017

Room W4.03, Cambridge Judge Business School

Cambridge Finance Workshop - Ilona Babenko

Nov 09, 2017

Room W2.01 Cambridge Judge Business School

Previous events

Upcoming events