Firms' Stakeholders and the Costs of Transparency

  title={Firms' Stakeholders and the Costs of Transparency},
  author={A. Almaz{\'a}n and J. Su{\'a}rez and S. Titman},
  journal={Corporate Finance: Valuation},
  • A. Almazán, J. Suárez, S. Titman
  • Published 2007
  • Business
  • Corporate Finance: Valuation
  • We develop a model of a firm whose production process requires it to start and nurture a relationship with its stakeholders. Because there are spillover benefits associated with being associated with a "winner," the perceptions of stakeholders and potential stakeholders can affect firm value. Our analysis indicates that while transparency (i.e., generating information about a firm's quality) may improve the allocation of resources, a firm may have a higher ex ante value if information about its… CONTINUE READING
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