We consider: i) a dynamic investor who rebalances over time, treats returns as i.i.d., and accounts for learning, and ii) a static buy-and-hold investor who is aware of predictability and estimation risk. Both investors are internationally diversified and combine information on long- and...

We study market efficiency in an infinite-horizon model with a monopolistic insider. The insider can trade with a competitive market maker and noise traders, and observes privately the expected growth rate of asset dividends. In the absence of the insider, this information would be reflected in...

Market discipline is an article of faith among financial economists, and the use of market discipline as a regulatory tool is gaining credibility. Effective market discipline involves two distinct components: security holders' ability to accurately assess the condition of a firm (monitoring) and...