Technology Adoption with Exit in Imperfectly Informed Equity Markets

41 Pages Posted: 29 Sep 2008 Last revised: 29 Sep 2013

See all articles by Katrin Tinn

Katrin Tinn

Imperial College London - Accounting, Finance, and Macroeconomics; McGill University - Desautels Faculty of Management; Imperial College Business School

Date Written: November 2008

Abstract

This paper focuses on the importance of equity markets in facilitating the exit of entrepreneurs investing in technology. Entrepreneurs' willingness to invest and aggregate output is affected in two opposite ways. First, uncertainty about equity price or lack of market liquidity discourages technology adoption. This can explain slow technology adoption and limited participation by venture capitalists in underdeveloped equity markets. Second, imperfectly informed market participants rationally take fast adoption as a positive signal. The resulting increase of expected market value encourages technology adoption. Fast technology adoption is most probable if the quality of information is at an intermediate level.

Keywords: Technology adoption, equity market, exit opportunities, transparency, imperfect information

JEL Classification: D82, E44, G10,O30

Suggested Citation

Tinn, Katrin, Technology Adoption with Exit in Imperfectly Informed Equity Markets (November 2008). Available at SSRN: https://ssrn.com/abstract=1275062 or http://dx.doi.org/10.2139/ssrn.1275062

Katrin Tinn (Contact Author)

Imperial College London - Accounting, Finance, and Macroeconomics ( email )

South Kensington campus
London SW7 2AZ
United Kingdom

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A1G5 H3A 2M1
Canada

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

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