Voluntary Disclosure in Light of Control Concerns

33 Pages Posted: 15 Jan 2019

See all articles by Anil Arya

Anil Arya

Ohio State University (OSU) - Fisher College of Business

Ram Ramanan

SUNY at Binghamton - School of Management

Date Written: January 2019

Abstract

The centrality of private information in the design of accounting institutions has been explored via agency models that address control concerns as well as disclosure models that amplify valuation issues. Somewhat surprisingly, the joint analysis of control and valuation considerations, and their implication for firms’ voluntary disclosure practices have not received much attention. Our paper addresses this shortcoming. With embedded control and valuation concerns, the nature of the firm’s disclosure in the stock market is altered profoundly – disclosure is two-tailed or intermediate, but not single-tailed as is the norm in the disclosure literature bereft of control problems. The severity of the control problem is also altered in that disclosure changes managerial incentives to acquire and exploit private information.

Keywords: adverse selection, control problems, private information, voluntary disclosure

Suggested Citation

Arya, Anil and Ramanan, Ram, Voluntary Disclosure in Light of Control Concerns (January 2019). Available at SSRN: https://ssrn.com/abstract=3314678 or http://dx.doi.org/10.2139/ssrn.3314678

Anil Arya

Ohio State University (OSU) - Fisher College of Business ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

Ram Ramanan (Contact Author)

SUNY at Binghamton - School of Management ( email )

P.O. Box 6015
Binghamton, NY 13902-6015
United States

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