Sequential Voluntary Disclosure

Abstract

Firms disclose information sequentially, responding to peers’ disclosure choices and short-term price pressures. This paper develops a dynamic model that examines how peer effects, disclosure timing, and managerial myopia jointly shape voluntary disclosure behavior. The model isolates correlation in firms’ information endowments as the primary economic force. When the timing of disclosure decisions is exogenous, the presence of a peer firm increases the ex-ante likelihood of disclosure. This effect strengthens as the correlation in information endowments increases. When one or both firms can choose the disclosure timing strategically, the equilibrium features prompt disclosure of favorable news, delayed disclosure of intermediate news, and withholding of unfavorable news. Signaling effects through timing, real-option value of disclosure deferral, and preemptive disclosure motives arise endogenously in equilibrium. Managerial myopia has opposing effects on early-date disclosure across regimes: with exogenous timing, it induces more withholding; with strategic timing, it encourages more disclosure.

Keywords: Strategic Timing, Peer Effects, Voluntary Disclosure, Managerial Myopia

JEL Classification: C72, D83, D21, G14, M40