Mandatory and Voluntary Disclosures: Dynamic Interactions

Posted: 24 Apr 2018 Last revised: 4 Jun 2018

Multiple version iconThere are 2 versions of this paper

Date Written: March 31, 2018


Firms sometimes obtain soft private information about growth prospects along with hard information about current or past performance. In this environment, we find that optimizing disclosures over multiple periods yields nonlinear stock price reactions following both voluntary and mandatory disclosures. Further, we derive several predictions about distinct short-run and long-run effects of disclosures and nondisclosures on security prices. Under specified conditions, when the volatility of the firm’s earnings increases, the average contemporaneous and prospective post-mandatory disclosure market premia (for voluntary disclosures over nondisclosures) rise, while farther-in-future market discounts (for such voluntary disclosures) also become larger. Our analysis moreover predicts that both the disclosure probability and the information content of nondisclosures can increase in the persistence of earnings.

Keywords: mandatory disclosure, voluntary disclosure, dynamic, multiple periods, growth, signaling, hard and soft information

JEL Classification: D21, D82, D83, G14, M41

Suggested Citation

Cianciaruso, Davide and Sridharan, Swaminathan, Mandatory and Voluntary Disclosures: Dynamic Interactions (March 31, 2018). Journal of Accounting Research, Forthcoming, HEC Paris Research Paper No. ACC-2018-1278, Available at SSRN: or

Davide Cianciaruso (Contact Author)

New Economic School (NES) ( email )

45 Skolkovskoe shosse
Moscow, 121353

Swaminathan Sridharan

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-8807 (Phone)
847-467-1202 (Fax)

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