Diversity of Opinion and Financing of New Technologies
Open accessAbstract
The objective of this paper is to compare the effectiveness of financial markets and financial intermediaries in financing new industries and technologies in the presence of diversity of opinion. In markets, investors become informed about the details of the new industry or technology and make their own investment decisions. In intermediaries, the investment decision is delegated to a manager, who is the only one who needs to become informed, which saves on information costs, but investors may anticipate disagreement with the manager and be unwilling to provide funds. Financial markets tend to be superior when there is significant diversity of opinion and information is inexpensive. Journal of Economic Literature Classification Numbers: G1, G2.
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Cites
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Diamond, D. W. (1984) · The Review of Economic Studies · doi:10.2307/2297430 · Cited by 8,476 · see citing works
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Arm’s Length Financing and Innovation: Evidence from Publicly Traded Firms
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- Authors
- Allen, F., & Gale, D.
- Affiliations
- University of Pennsylvania (US)
- New York University (US)
- Venue
- Journal of Financial Intermediation
- Publisher
- Elsevier BV
- Published
- 1999-01
- Volume
- 8
- Issue
- 1-2
- Pages
- 68-89
- ISSN
- 1042-9573 (ISSN-L)
- OpenAlex
- W2043071836
- Cited by
- 425
- References
- 2
- Citations by year
- 2026: 6 · 2025: 7 · 2024: 12 · 2023: 17 · 2022: 10 · 2021: 22 · 2020: 11 · 2019: 21 · 2018: 24 · 2017: 17 · 2016: 16 · 2015: 22 · 2014: 13 · 2013: 19 · 2012: 26
- FWCI
- 22.01
- Type
- journal article
- Language
- en
- Open access
- hybrid
- doi.org
- Licence
- Locations
- Journal of Financial Intermediation (publishedVersion, cc-by-nc-nd)
- RePEc: Research Papers in Economics (submittedVersion)
- SSRN Electronic Journal (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
- Social Sciences › Business, Management and Accounting › Accounting › Corporate Finance and Governance
- Social Sciences › Business, Management and Accounting › Accounting › Private Equity and Venture Capital
- Keywords
- opinion diversity, financial markets, financial intermediaries, information costs, investment decision-making, delegation
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