Pricing, issuance volume, and design of innovative securities: The role of investor information
Journal
Journal of Financial Intermediation
ISSN
1042-9573
Type
journal article
Date Issued
2023-07
Author(s)
Abstract
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.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Elsevier BV
Volume
55
Official URL
Division(s)