Information Relevance, Reliability, and Disclosure
53 Pages Posted: 22 May 2009 Last revised: 1 Mar 2014
Date Written: June 2010
Abstract
This paper examines the relation between information’s properties, such as reliability and relevance, and public disclosure policy. It shows that the optimal accounting system often involves a carefully balanced combination of mandatory and voluntary disclosure, with mandatory reporting focused on more reliable information. The emphasis on reliability causes the welfare-maximizing mandatory report to consistently lag behind the financial market in incorporating value-relevant information.
Keywords: Reliability, Relevance, Disclosure
JEL Classification: M41, D43, D82
Suggested Citation: Suggested Citation
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