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The Role of Information Density in Infrastructure Investment

TitleThe Role of Information Density in Infrastructure Investment
Publication TypeWorking Paper
Year of Publication2014
AuthorsSharma, R, Knight, E
Abstract

The twentieth century witnessed an extraordinary flow of institutional investment into urban
infrastructure. Notwithstanding this, the demand for infrastructure projects exceeds supply of
skills and capital. With this disconnect as a backdrop we develop a model of information flow
to examine how financial assets are transacted over time and space. Specifically, we build on
conceptualisations of ‘information content’ from Clark and O’Connor (1997) to propose a
way of theorising ‘information density’. We apply this specifically to infrastructure
investment and find four ways in which infrastructure investment is highly dense. This relates
to asset-level definitions in infrastructure, opacity with respect to how products are
securitised, high variance in investment performance, and high relational and investment
expertise. We draw on a large qualitative sample of 53 in-depth interviews, which we validate
with quantitative data, to support our findings.

URLhttp://ssrn.com/abstract=2473894