Skill Acquisition and Data Sales

65 Pages Posted: 16 Nov 2016 Last revised: 29 Apr 2021

See all articles by Shiyang Huang

Shiyang Huang

The University of Hong Kong - Faculty of Business and Economics

Yan Xiong

The Hong Kong University of Science and Technology

Liyan Yang

University of Toronto - Rotman School of Management

Date Written: April 29, 1

Abstract

We develop a data-sales model to study the implications of alternative data for financial markets. Investors acquire skills to process the purchased raw data, and developing such skills is costly and involves considerable uncertainty. The data vendor controls the size of the data sample to influence how precise information investors can extract from the purchased data. Price informativeness is hump-shaped in skill-acquisition costs, while the cost of capital and return volatility are U-shaped in skill-acquisition costs. Similar patterns can arise for skill mean and skill volatility. Our analysis suggests that the funds industry and the data industry foster each other.

Keywords: Data sales, skill acquisition, alternative data, asset prices

JEL Classification: D82, G12, G14

Suggested Citation

Huang, Shiyang and Xiong, Yan and Yang, Liyan, Skill Acquisition and Data Sales (April 29, 1). Rotman School of Management Working Paper No. 2870190, Available at SSRN: https://ssrn.com/abstract=2870190 or http://dx.doi.org/10.2139/ssrn.2870190

Shiyang Huang

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Yan Xiong

The Hong Kong University of Science and Technology ( email )

HKUST
Kowloon
Hong Kong
Hong Kong

Liyan Yang (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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