The Influence Of Mediator On Equity Financing Results Under Inequality Aversion

In the presence of inequality aversion,how people attribute the intent of others’ actions often influences their feelings of inequality averse and thus their subsequent actions.For example,when an enterprise raises funds by transferring equity to investors,the higher stock price may be due to the high net asset value per share of the enterprise,or even though the net asset value per share is low,the enterprise wants to hide from investors,so as to raise more funds for other investment activities.In the latter case,the high price of the stock is more likely to irritate investors than in the former case,making them choose not to invest.However,for the mediator with credibility in the market,no matter what purpose it is for,it can change investors’ attribution to the stock price by providing credible information about the net assets per share of the enterprise,so as to eliminate misunderstandings and improve the efficiency of economic allocation.In this paper,in the setting of Bayesian persuasion,the ultimatum game is used to explore how the mediator can change investors’ attribution to the firm’s stock price by providing completely credible information about the firm’s stock price net assets,so as to maximize the mediator’s utility.This paper firstly solves the equilibrium of the ultimatum game,then considers three possible objective functions of the mediator:transaction probability,expected return and interim feeling,and gives the optimal information disclosure strategy of the mediator under these three objective functions.The results show that,no matter what the objective function of the mediator is,in most cases,partial disclosure is optimal for her.Moreover,full disclosure is always optimal only if the goal of the mediator is to maximize the interim feeling.Finally,this paper compares the mediator’s optimal information disclosure strategies between Bayesian persuasion and Cheap talk.The result shows that for all three objective functions,if the equilibrium information disclosure strategy is separating in the Cheap talk game,then full revelation is optimal in the Bayesian persuasion setup,but not vice versa.