Information Externalities Among Listed Firms

71 Pages Posted: 15 Mar 2021 Last revised: 18 Jan 2023

See all articles by Jae Hyoung Kim

Jae Hyoung Kim

Imperial College London

Alexander Ljungqvist

Centre for Economic Policy Research (CEPR); Swedish House of Finance; European Corporate Governance Institute (ECGI)

Date Written: January 16, 2023


We show that private firms that go public in the U.S. create positive information externalities for their already-listed peers: their IPO filings improve their peers’ trading liquidity directly, by reducing information asymmetry, and indirectly, by crowding in both voluntary disclosure and analyst information production at peer firms. Positive information externalities, and the complementarities they operate through, support regulators’ claim that mandatory disclosure requirements improve the market-wide information environment. Startups that choose to stay private, as more and more have done since 1997, deprive investors of the benefit of positive information spillovers, contributing to a sub-optimally small stock market.

Keywords: IPOs, mandatory disclosure, voluntary disclosure, information externalities, information environments, strategic interaction, liquidity, analyst coverage, information demand

JEL Classification: G14, M41, G38, D82

Suggested Citation

Kim, Jae Hyoung and Ljungqvist, Alexander and Ljungqvist, Alexander, Information Externalities Among Listed Firms (January 16, 2023). Swedish House of Finance Research Paper No. 21-07, Available at SSRN: or

Jae Hyoung Kim

Imperial College London ( email )

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

Alexander Ljungqvist (Contact Author)

Centre for Economic Policy Research (CEPR)

United Kingdom

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
PlumX Metrics