Dynamic Information Disclosure
51 Pages Posted: 22 Jan 2013 Last revised: 31 Jan 2016
Date Written: January 21, 2013
We explore the optimal timing of voluntary disclosures by firms. By delaying disclosure of a signal, firms encourage the acquisition of correlated signals by reducing informed investors’ exposure to the long-term risk of holding the asset. Immediate disclosure reduces rents from acquiring the correlated signal, and thus is sometimes suboptimal in a dynamic setting. We characterize conditions under which postponing disclosure is preferable, which allows us to develop predictions on the timing of voluntary information disclosures such as management guidance.
Keywords: disclosure, informational efficiency, noisy rational expectations
JEL Classification: G12, G14
Suggested Citation: Suggested Citation