Public Information and Coordination: Evidence from a Credit Registry Expansion. Journal of Finance 66:379–412

When agents have incentives to coordinate, actions are more sensitive to public than to private information because it is a better forecast of the actions of others. We provide evidence of this publicity multiplier among creditors to a common borrower. A coordination problem arises because each creditor has less incentive to rollover \u85nancing if it believes other creditors will liquidate their claims and potentially disrupt operations. For identi\u85cation we exploit a technological change in Argentinas Public Credit Registry in 1998 that led to the disclosure of debt and rating information for rms with less than $200,000 in total debt. Comparing \u85rms either side of this threshold, we show that lenders who already had a negative assessment of a \u85rm reduce lending upon announcement that private assessments will become common knowledge. The decline occurs only if the \u85rm has other creditors, and before the lender receives any additional information. On average, making information public causes a permanent decline in debt and an immediate increase in defaults