Mandatory Disclosure and Asymmetry in Financial Reporting

Authors

• Jeremy Bertomeu, Baruch College CUNYFollow
• Robert P. Magee, Northwestern University

ORCID

Jeremy Bertomeu, https://orcid.org/0000-0001-6746-5767

Language

English (en)

Publication Date

2-25-2014

Abstract

This article examines the demand for disclosure rules by inf ormed managers interested in increasing the market price of their firms. Within a model o f political influence, a major- ityof managers chooses disclosure rules with which allfirms must comply. In equilibrium, disclosure rules are asymmetric with greater levels of disc losure over adverse events. This asymmetry is positively associated with the informativene ss of the measurement and increas- ing in the level of verifiability and ex-ante uncertainty of t he information. The theory also offers implications about the relation between mandatory a nd voluntary disclosure, when both channels are endogenous.

Document Type

Working Paper

DOI

https://doi.org/10.7936/mmvn-q459

Author's Department

Accounting

Author's School

Olin Business School

Recommended Citation

Bertomeu, Jeremy and Magee, Robert P., "Mandatory Disclosure and Asymmetry in Financial Reporting" (2014). Olin Business School Faculty Research. 12.
https://openscholarship.wustl.edu/business_facpubs/12