Attracting Attention : Cheap Managerial Talk and Costly Market Monitoring ∗

  title={Attracting Attention : Cheap Managerial Talk and Costly Market Monitoring ∗},
  author={Andres Almazan},
This paper provides a theory of informal communication (cheap talk) between firms and the capital market. The theory emphasizes the central role that agency conflicts play in firms’ disclosure policies. Since managers’ information is a consequence of their actions, incentive compensation and information disclosure become two intrinsically linked aspects of corporate governance. In the model, the information disclosed by managers attracts market attention and guides investors in their… CONTINUE READING
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