Voluntary Disclosure, Price Informativeness, and Efficient Investment

101 Pages Posted: 14 Apr 2020 Last revised: 7 Mar 2022

See all articles by Matthias Lassak

Matthias Lassak

Aarhus University; Danish Finance Institute

Date Written: March 6, 2022


This paper studies efficiency implications of voluntary disclosure where market prices are a source of information for corporate investment-making. To improve her investment decision, a manager discloses her private information if it crowds-in informed trading and helps her to learn more information from the market. However, such disclosing behavior generates an unintended consequence: It reduces informed trading and harms investment-making whenever there is no disclosure. The efficiency loss after nondisclosure may dominate, implying that voluntary disclosure can be a source of real inefficiency through distorting market feedback. The model provides important empirical and policy implications regarding feedback-intended voluntary disclosure.

Keywords: Voluntary Disclosure, Price Informativeness, Investment Efficiency, No News Is Bad News

JEL Classification: D82, G14, G31, M41

Suggested Citation

Lassak, Matthias, Voluntary Disclosure, Price Informativeness, and Efficient Investment (March 6, 2022). Available at SSRN: https://ssrn.com/abstract=3556575 or http://dx.doi.org/10.2139/ssrn.3556575

Matthias Lassak (Contact Author)

Aarhus University ( email )

Fuglesangs Allé 4
Aarhus, 8210

Danish Finance Institute ( email )

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