Public disclosure , private information collection , and short-term trading *

  title={Public disclosure , private information collection , and short-term trading *},
  author={Maureen F. McNichols and Brett Trueman},
This paper examines how public disclosure affects private information acquisition activity in a market economy. We analyze a setting where traders with short-term investment horizons are allowed to trade on their private information prior to a public disclosure. We demonstrate in this setting that public disclosure stimulates investment in private information acquisition. This result is shown to have implications for the magnitude of the pre-announcement and announcement price reactions to the… CONTINUE READING
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