Journal of Accounting and Economics Vol. 5 1983
Discretionary disclosure
Abstract
This paper shows how the existence of disclosure-related costs offers an explanation for why a manager exercise discretion in disclsing information even though traders have rational expectations about his motivation to withhold unfavorable reports. In effect, disclosure-related costs introduce noise by extending the range of possible interpretations of withheld information to include news which is actually favorable. Therefore, traders are unable to interpret withheld information as unambiguously ‘bad new’ and thereby discount the value of the firm to the point that the manager is better served to disclose what he knows.
- DOI
- 10.1016/0165-4101(83)90011-3
- Volume
- 5
- Pages
- 179-194
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref