Voluntary Disclosure Under Imperfect Competitions: Experimental Evidence

Federal Reserve Bank of Atlanta Working Paper No. 98-7

Posted: 29 Oct 1998

See all articles by Lucy F. Ackert

Lucy F. Ackert

Kennesaw State University - Michael J. Coles College of Business

Bryan K. Church

Georgia Institute of Technology - Accounting Area

Mandira Roy Sankar

University of Southern California - Leventhal School of Accounting

Date Written: June 1998

Abstract

This study investigates disclosure behavior when a manager has incentives to influence the actions of a product market competitor in a Cournot duopoly. Theoretical research suggests that under various conditions the manager has incentives to withhold some signals and disclose others. Using an experimental economics method, we find support for partial information disclosure. Our results suggest that when the manager receives private information about industry-wide cost, unfavorable (favorable) information is disclosed (withheld) and the competitor adjusts production accordingly. In contrast, when the manager receives private information about firm-specific cost, disclosure behavior is not affected by the favorableness of the information, and the competitor's production decision is invariant to the disclosure choice.

JEL Classification: D82, L10

Suggested Citation

Ackert, Lucy F. and Church, Bryan K. and Sankar, Mandira Roy, Voluntary Disclosure Under Imperfect Competitions: Experimental Evidence (June 1998). Federal Reserve Bank of Atlanta Working Paper No. 98-7, Available at SSRN: https://ssrn.com/abstract=119548

Lucy F. Ackert (Contact Author)

Kennesaw State University - Michael J. Coles College of Business ( email )

1000 Chastain Road
Department of Economics and Finance
Kennesaw, GA 30144
United States
770-423-6111 (Phone)
770-499-3209 (Fax)

Bryan K. Church

Georgia Institute of Technology - Accounting Area ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States
404-894-3907 (Phone)
404-894-6030 (Fax)

Mandira Roy Sankar

University of Southern California - Leventhal School of Accounting ( email )

Los Angeles, CA 90089-0441
United States
213-740-1846 (Phone)
213-747-2815 (Fax)

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