This paper analyzes incentives for voluntary disclosure of proprietory information. Proprietory information, if disclosed, provides strategic information to potential competitors, but can be helpful to the financial market in valuing the firm more accurately. Focusing on a stylized model of a static entry game, we show that a fully revealing disclosure equilibrium exists when the prior of the market is optimistic or the entry cost is relatively low. When the prior is pessimistic or the entry cost is high, however, both non- and partial-disclosure equilibria obtain. Our analysis predicts that competition in the product market encourages voluntary disclosure.

Accounting-based dividend constraints in lending contracts are imperfect means of mitigating conflicts of interests between stockholders and bondholders since managers have flexibility to make accounting decisions to circumvent the covenants. This paper documents firms' accounting and dividend responses to an increase in the tightness of dividend constraints. Firms cut dividends and do not appear to make accounting changes to circumvent the dividend restriction. The magnitude of the dividend cut is proportional to the tightness of the dividend constraint. This suggests that accounting-based covenants are effective means for bondholders to restrict firmsś dividend policies.

This paper examines the bond and stock price reactions to the announcement of insubstance defeasances, and the motivations for the transaction. We find a reliably positive bond price reaction and a reliably negative stock price reaction. However, the bond price reaction is much less than would be predicted had the defeased bonds been made riskless. We find evidence suggesting that some firms defease to window-dress their earnings, some defease to avoid restrictions in bond covenants, and some defease as a use for excess cash on hand.