The Price of Disclosure in the Thoroughbred Yearling Market
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In this article, we examine disclosure as a tool to mitigate the effects of asymmetric information
in a Thoroughbred yearling market. If disclosures influence market price, information
contained therein must be valuable to buyers and hence diminish asymmetric
information. Using public auction data, we find that disclosures do not influence price in
a segment of the auction in which an implicit quality certification is available. However, in
the other segment, we find evidence that some disclosures may provide valuable information
to buyers.