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Quarterly Review of Economics and Finance



Emerging equity markets are plagued by poor information, which is a barrier to outside shareholder participation. This paper examines the determinants of share prices of two United States companies over a 14-year period during the late 19th century, when America had an emerging equity market. These two companies withheld all information on profits and assets until the end of the period, yet traded regularly. Overall, the evidence suggests that outside investors received sufficient compensation for their ignorance, and that these outsiders set the market price. An event study shows that when information about company assets was revealed, market returns were significantly changed.


NOTICE: this is the author’s version of a work that was accepted for publication in Quarterly Review of Economics and Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Quarterly Review of Economics and Finance, 40, 3, 2007 10.1016/S1062-9769(00)00041-7.