Biased Voluntary Disclosure

Review of Accounting Studies, Forthcoming

39 Pages Posted: 6 Jul 2011

See all articles by Eti Einhorn

Eti Einhorn

Tel Aviv University

Amir Ziv

Columbia Business School

Date Written: July 3, 2011


We provide a bridge between the voluntary disclosure and the earnings management literature. Voluntary disclosure models focus on managers’ discretion in deciding whether or not to provide truthful voluntary disclosure to the capital market. Earnings management models, on the other hand, concentrate on managers’ discretion in deciding how to bias their mandatory disclosure. By analyzing managers’ disclosure strategy when disclosure is voluntary and not necessarily truthful, we show the robustness of voluntary disclosure theory to the relaxation of the standard assumption of truthful reporting. We also demonstrate the sensitivity of earnings management theory to the commonly made mandatory disclosure assumption.

Keywords: Financial Accounting, Asymmetric Information, Voluntary Disclosure, Reporting Bias, Earnings Management

JEL Classification: D82, G14, M41, M43

Suggested Citation

Einhorn, Eti and Ziv, Amir, Biased Voluntary Disclosure (July 3, 2011). Review of Accounting Studies, Forthcoming, Available at SSRN:

Eti Einhorn (Contact Author)

Tel Aviv University ( email )

P.O. Box 39010
Ramat Aviv, Tel Aviv, 69978

Amir Ziv

Columbia Business School ( email )

3022 Broadway, 704 Uris
New York, NY 10027 10027
United States
212 854-3485 (Phone)
212 253-4095 (Fax)

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