ORCID
Jeremy Bertomeu, https://orcid.org/0000-0001-6746-5767
Language
English (en)
Publication Date
3-1-2011
Abstract
This article develops a theory of endogenous mandatory disclosure. In the model, the implemented mandatory disclosure policy is a function of the collective demands in favor or against new regulations. We establish that, in general, the policy exhibits impairment-like disclosures of sufficiently unfavorable economic events and excessive disclosure relative to the ex-ante social optimum. The level of mandatory disclosure increases with lower disclosure costs and when the market is more responsive to informa- tion. The theory explains a variety of commonly-observed facts about mandatory disclosure, such as the asymmetric recognition of gains vs. losses, the coarse information issued by regulated auditors or the growth of disclosure requirements during periods of political intervention.
Document Type
Working Paper
DOI
https://doi.org/10.7936/77ev-nk46
Author's Department
Accounting
Recommended Citation
Bertomeu, Jeremy; Magee, Robert P.; and Schneider, Georg, "Mandatory Disclosure" (2011). Olin Business School Faculty Research. 19.
https://openscholarship.wustl.edu/business_facpubs/19