People Accounting

Lauren Vollon: How Information Affects Capital Markets

, by Giulia Sargiacomo
Capital market regulation and acquisitions that involve a startup are among the research interests of the new Assistant Professor at the Department of Accounting

For a startup, the obstacles between the phase of just having growth potential and affirming itself as a mature company are several. However, it has been shown by scholars that one of the most popular obstacles – financing – can be solved if a startup has on its side a venture capital firm. On the same thread, Lauren Vollon, Assistant Professor at Bocconi's Department of Accounting, proves that the presence of a venture capital firm in startups' M&A transactions reduces information asymmetry between the target and the buyer.

As a matter of fact, a crucial stage of the life of a startup is the so-called "exit process." In particular, a startup can "exit" from the earliest phase of its life in two possible ways: an M&A or an initial public offering (IPO). In his job market paper, Vollon decides to focus on the former and proves that venture capital firms have an informational role in the transition because when one of them is involved, it is less likely to see earnouts (arrangements in the M&A contracts where part of the payment is made contingent on a future event or performance).

This research, besides shading light on a less-explored stream of accounting literature, offers concrete results that can be used outside academia. A world that Lauren knows extensively.

Indeed, before joining the University of Chicago for its PhD in Accounting and an MBA, the new Assistant Professor gained some first-hand experience in the M&A field as an advisor. Before that, Vollon was awarded two BSc degrees in Business Management and Business Economics, both cum laude, and an MSc in Finance at UC San Diego.

When not investigating the field of private M&A contracting with his research questions, Lauren Vollon focuses on capital market regulation. As an example, his first publication in the Review of Accounting Studies (2019) shows that the harmonization or the strengthening of the regulation about securities in EU countries increase equity ownership of households. This mechanism is possible because the amount of wealth that households are willing to invest in equity market depends on the confidence they perceive about future returns. Hence, if regulation is reinforced, households' confidence in the stock market is boosted.

Interestingly, this effect is observable not only when the change in regulation happens in the home country of households, but also in other EU countries. Additionally, the power of these results increases when the countries involved have lower trust or when cultural biases are more pronounced.

In a paper from the same research stream, Vollon demonstrates how capital market liquidity increases when financial information is centralized. Firms disclose a large bulk of information, but it is fundamental to keep in mind that it is not costless to acquire and process it. If these costs are significant, investors may decide to not incorporate information in their decisions, thus increasing information asymmetry and reducing market liquidity. Hence, if all financial information is placed in an easy-to-access platform, market liquidity spikes.

It is worth highlighting that this result is important for small firms: by lowering information processing costs, these companies can enjoy more access to financing.

Find out more

Christensen, H. B., Maffett, M., & Vollon, L. (2019). "Securities Regulation, Household Equity Ownership, and Trust in the Stock Market." Review of Accounting Studies, 24(3), 824-859. DOI:

Sran, G., Tuijn, M., & Vollon, L. (2020). "The Capital Market Effects of Centralizing Regulated Financial Information." Available at SSRN. DOI: