The DOI matches its Crossref record; 17 of the 17 references it cites were found in a registry or an index.
Disclosure, Liquidity, and the Cost of Capital
Abstract
This paper shows that revealing public information to reduce information asymmetry can reduce a firm's cost of capital by attracting increased demand from large investors due to increased liquidity of its securities. Large firms will disclose more information since they benefit most. Disclosure also reduces the risk bearing capacity available through market makers. If initial information asymmetry is large, reducing it will increase the current price of the security. However, the maximum current price occurs with some asymmetry of information: further reduction of information asymmetry accentuates the undesirable effects of exit from market making.
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In the citing paper
“The most commonly discussed benefit of transparency is that it reduces asymmetric information, and hence lowers the cost of trading the firm's securities and the firm's cost of capital.”
From Transparency and corporate governance (2014) · cites this paper as Diamond and Verrecchia (1991)
Citations
Cites
Continuous Auctions and Insider Trading
Kyle, A. S. (1985) · Econometrica · doi:10.2307/1913210 · Cited by 10,145
Bid, ask and transaction prices in a specialist market with heterogeneously informed traders
Glosten, L. R., & Milgrom, P. (1985) · Journal of Financial Economics · doi:10.1016/0304-405x(85)90044-3 · Cited by 5,909
Asset pricing and the bid-ask spread
Amihud, Y., & Mendelson, H. (1986) · Journal of Financial Economics · doi:10.1016/0304-405x(86)90065-6 · Cited by 5,090
Holmstrom, B. R. (1982) · The Bell Journal of Economics · doi:10.2307/3003457 · Cited by 4,928
A Theory of Intraday Patterns: Volume and Price Variability
Admati, A. R., & Pfleiderer, P. (1988) · Review of Financial Studies · doi:10.1093/rfs/1.1.3 · Cited by 3,282
Liquidity and Market Structure
Grossman, S. J., & Miller, M. H. (1988) · The Journal of Finance · doi:10.1111/j.1540-6261.1988.tb04594.x · Cited by 1,578
Optimal dealer pricing under transactions and return uncertainty
Ho, T., & Stoll, H. R. (1981) · Journal of Financial Economics · doi:10.1016/0304-405x(81)90020-9 · Cited by 1,336
Optimal Release of Information By Firms
Diamond, D. W. (1985) · The Journal of Finance · doi:10.1111/j.1540-6261.1985.tb02364.x · Cited by 1,106
Self-citationRoss, S. A. (1989) · The Journal of Finance · doi:10.1111/j.1540-6261.1989.tb02401.x · Cited by 1,047
Information aggregation in a noisy rational expectations economy
Diamond, D. W., & Verrecchia, R. E. (1981) · Journal of Financial Economics · doi:10.1016/0304-405x(81)90026-x · Cited by 1,042
Self-citation
Research works printed but not linked: 2
- Brady Commission, 1988, Report of the Presidential Task Force on Market Mechanisms
- New York Stock Exchange, 1990, Market Volatility and Investor Confidence
Cited by
Sorted by citations
Items 1,001–1,001 of 1,001
Transparency and corporate governance
Hermalin, B. E. (2014) · Enterprise Law · doi:10.4337/9781781004456.00032 · Cited by 6
Metadata
- Authors
- DIAMOND, D. W., & VERRECCHIA, R. E.
- Affiliations
- Georgetown University (US)
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 1991-09
- Volume
- 46
- Issue
- 4
- Pages
- 1325-1359
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W2154187126
- Cited by
- 3,836
- References
- 16
- Citations by year
- 2026: 219 · 2025: 232 · 2024: 228 · 2023: 188 · 2022: 198 · 2021: 215 · 2020: 201 · 2019: 165 · 2018: 189 · 2017: 199 · 2016: 181 · 2015: 190 · 2014: 198 · 2013: 182 · 2012: 157
- FWCI
- 13.32
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- The Journal of Finance (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Finance › Corporate Finance and Governance
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
- Social Sciences › Business, Management and Accounting › Accounting › Auditing, Earnings Management, Governance
- Keywords
- information disclosure, information asymmetry, cost of capital, liquidity, large investors, market makers, security prices, firm size, corporate finance
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Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
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