Information Relevance, Reliability, and Disclosure

53 Pages Posted: 22 May 2009 Last revised: 1 Mar 2014

See all articles by Xiao-Jun Zhang

Xiao-Jun Zhang

University of California, Berkeley; China Academy of Financial Research (CAFR)

Date Written: June 2010


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

Zhang, Xiao-Jun, Information Relevance, Reliability, and Disclosure (June 2010). Review of Accounting Studies (2012) 17:189-226, Available at SSRN: or

Xiao-Jun Zhang (Contact Author)

University of California, Berkeley ( email )

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China Academy of Financial Research (CAFR)

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