TY - JOUR
T1 - Signaling theory and risk perception
T2 - An experimental study
AU - Levy, Haim
AU - Lazarovich-Porat, Esther
PY - 1995/2
Y1 - 1995/2
N2 - Theoretical models provide unsatisfactory solutions to many issues in finance and economics. For some important issues, signaling theory bridges the gap between the theoretical solutions and the firm's actual behavior. However, many of the signaling theories are difficult, if not impossible, to test empirically. In this paper, we provide experimental tests of one of the signaling theories. We test the hypothesis that the larger the proportion of entrepreneur participation in a project, the higher is its stock price, as determined in an auction. The results strongly support the hypothesis.
AB - Theoretical models provide unsatisfactory solutions to many issues in finance and economics. For some important issues, signaling theory bridges the gap between the theoretical solutions and the firm's actual behavior. However, many of the signaling theories are difficult, if not impossible, to test empirically. In this paper, we provide experimental tests of one of the signaling theories. We test the hypothesis that the larger the proportion of entrepreneur participation in a project, the higher is its stock price, as determined in an auction. The results strongly support the hypothesis.
UR - http://www.scopus.com/inward/record.url?scp=27844442695&partnerID=8YFLogxK
U2 - 10.1016/0148-6195(94)00022-6
DO - 10.1016/0148-6195(94)00022-6
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AN - SCOPUS:27844442695
SN - 0148-6195
VL - 47
SP - 39
EP - 56
JO - Journal of Economics and Business
JF - Journal of Economics and Business
IS - 1
ER -