Shortcomings of Firms’ Valuation in Financial Markets

Marc Auberger Directeur général d’un fonds d’investissement.


In an efficient market, optimal allocation of capital to listed companies relies on precise public information on their future profitability. Market regulation enforces a wide disclosure of information in order to avoid insider trading so that this information becomes also available to competitors. As a result, managers are induced to limit public information and market participants have to make valuation decisions on the basis of a quite poor material. This may lead to financial bubbles or to financial restrictions to firms facing strategic competition. In order to avoid such shortcomings, a solution could be to rely on independent actors in charge of collecting confidential information and of making it available to all market participants in a synthetic way.


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