ORCID
Jeremy Bertomeu, https://orcid.org/0000-0001-6746-5767
Language
English (en)
Publication Date
2019
Abstract
We develop a theory of asymmetries between voluntary and man datory disclo- sure. Efficiently designed mandatory disclosure policies ar e substitutes for excessive voluntary disclosures. The efficient policy takes the form of a lower threshold be- low which firms must disclose bad news, and an upper threshold above which firms voluntarily disclose good news. Hence, mandatory disclosu res are asymmetric and feature conservative reporting of bad news. The threshold t o recognize bad news in- creases when information is more precise. We also character ize interactions between disclosures and real decisions in environments where infor mation has social value, e.g., investment, optimal liquidations, and adverse selec tion in a lemons’ market.
Document Type
Working Paper
DOI
https://doi.org/10.7936/c6f1-zx72
Author's Department
Accounting
Recommended Citation
Bertomeu, Jeremy; Vaysman, Igor; and Xue, Wenjie, "Voluntary Versus Mandatory Disclosure" (2019). Olin Business School Faculty Research. 20.
https://openscholarship.wustl.edu/business_facpubs/20