Voluntary Disclosure of Partially Verifiable Information
University of Marburg - Faculty of Economics and Business Administration
Schmalenbach Business Review, Vol. 56, pp. 139-163, April 2004
I consider voluntary disclosure of nonproprietary information. Established research presents two classes of models. Some authors assume that the manager can be sanctioned prohibitively high if he lies. Others assume cheap talk.
I analyze a setting with positive but non-prohibitive punishments. In my scenario, misreporting is a part of the information equilibrium. To assess the consequences of such misreporting, I present two distinct cases: If the capital market is already well informed about possible firm values prior to the disclosure, the majority of misreportings is detected. If the capital market has only very rough information, misreportings may lead to failures in the market's valuation and thus damage investors.
Number of Pages in PDF File: 25
Keywords: Perfect Bayesian Equilibirum, Signaling, Voluntary Disclosure
JEL Classification: M41, M45, G14, C72Accepted Paper Series
Date posted: June 28, 2004
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo5 in 0.391 seconds