Voluntary Disclosure of Nonproprietary Information: A Complete Equilibrium Characterization

21 Pages Posted: 14 Jan 2004

See all articles by Evelyn Korn

Evelyn Korn

University of Marburg - School of Business & Economics

Ulf Schiller

University of Basel

Multiple version iconThere are 2 versions of this paper

Date Written: May 16, 2002

Abstract

The so-called disclosure principle is a 'puzzle' in the accounting literature: Game theoretic models of financial markets show that in equilibrium firms should disclose all their private information. Yet, the result is not convincing. Researchers have therefore built sophisticated models in order to demonstrate for which reasons the disclosure principle might fail. This note shows that even in the original model there are multiple equilibria. In those equilibria good types disclose and bad types do not. The commonly known full disclosure equilibrium is a limit point of the equilibrium set.

Keywords: disclosure, nonproprietary information, perfect Bayesian equilibria

JEL Classification: M4, G14, C72

Suggested Citation

Korn, Evelyn and Schiller, Ulf, Voluntary Disclosure of Nonproprietary Information: A Complete Equilibrium Characterization (May 16, 2002). Available at SSRN: https://ssrn.com/abstract=312319 or http://dx.doi.org/10.2139/ssrn.312319

Evelyn Korn (Contact Author)

University of Marburg - School of Business & Economics ( email )

Universit├Ątsstr. 24
D-35037 Marburg
Germany
++49 6421 2823902 (Phone)
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HOME PAGE: http://www.uni-marburg.de/fb02/mikro

Ulf Schiller

University of Basel ( email )

Peter-Merian-Weg 6
Basel, 4002
Switzerland

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