Twitter’s missing tweet: Timely IPO data — Nemit Shroff

MIT Sloan Assistant Professor Nemit Shroff

MIT Sloan Assistant Professor Nemit Shroff

From WSJ MarketWatch

It’s widely believed that uncertainty is bad for business. If you don’t have the right information, you make the wrong decisions. Or you make no decisions at all. We saw this play out during the financial crisis when there was quite a lot of uncertainty and many investors held back.

With that in mind, my colleagues and I recently looked at the effect of having greater financial information available within an industry. Specifically, we studied the impact of public firms on an industry, as public firms are required to disclose large amounts of information. They have to issue quarterly financial statements and provide information on operational details such as business strategy, expected future outlook, and business risk. Financial analysts and the business press provide even more information on those companies. Taken together, that disclosure activity can improve the information environment for firms in that industry by reducing uncertainty.

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Sometimes product safety labels send the wrong message — Juanjuan Zhang

MIT Sloan Associate Prof. Juanjuan Zhang

MIT Sloan Associate Prof. Juanjuan Zhang

Transparency and full disclosure are popular notions, especially when applied to consumer product safety. If people have full access to knowledge about product content, then they can decide for themselves whether the product is safe, according to the prevailing view.

But when mandated by public policy, transparency and disclosure can have harmful unintended consequences, I have found in my research. For some consumers, the very fact that government requires disclosure about a product raises a red flag. Individuals will conclude that the government knows something they don’t about the product.  Many people will believe the product content that requires disclosure is unsafe and then not consume the product—even if it does not contain any harmful ingredients.

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