No. 113. ENVIRONMENTAL INFORMATION, ASYMMETRIC INFORMATION AND FINANCIAL MARKETS: A GAME-THEORETIC APPROACH

Published in DISCUSSION PAPERS

A. Chymis, I.E. Nikolaou, K. Evangelinos. 2010.

 

This paper examines the problem of asymmetric information in financial markets due to a lack of essential environmental information. Literature indicates that asymmetric information generates various problems for the actors of financial markets such as incomplete information for investment decisions and lending procedures, misallocation of financial markets funds, the underestimating of stock price securities and poor environmental risk management choices. To this end, this paper develops a game-theoretic approach to both examine the problem of asymmetric information caused by the absence of accurate environmental information and indicates how a well organized, internationally agreed auditing accounting certification scheme could play a critical role in solving this problem. 

 

(pdf)