On the Voluntary Disclosure of Redundant Information

47 Pages Posted: 11 Oct 2021 Last revised: 8 Nov 2022

See all articles by Snehal Banerjee

Snehal Banerjee

University of Michigan at Ann Arbor - Finance

Bradyn M. Breon-Drish

University of California, San Diego (UCSD) - Rady School of Management

Ron Kaniel

University of Rochester - Simon Business School; CEPR

Ilan Kremer

University of Warwick; Hebrew University of Jerusalem

Date Written: August 24, 2021

Abstract

Why do firms engage in costly, voluntary disclosure of information which is subsumed by a later announcement? We consider a model in which the firm's manager can choose to disclose short-term information which becomes redundant later. When disclosure costs are sufficiently low, the manager discloses even if she only cares about the long-term price of the firm. Intuitively, by disclosing, she causes early investors to trade less aggressively, reducing price informativeness, which in turn increases information acquisition by late investors. The subsequent increase in acquisition more than offsets the initial decrease in price informativeness and, consequently, improves long term prices.

Keywords: costly voluntary disclosure, information acquisition, redundant information

JEL Classification: D21, D82, D83, D84, G14, G32

Suggested Citation

Banerjee, Snehal and Breon-Drish, Bradyn M. and Kaniel, Ron and Kremer, Ilan and Kremer, Ilan, On the Voluntary Disclosure of Redundant Information (August 24, 2021). Available at SSRN: https://ssrn.com/abstract=3910693 or http://dx.doi.org/10.2139/ssrn.3910693

Snehal Banerjee (Contact Author)

University of Michigan at Ann Arbor - Finance ( email )

701 Tappan Street
Ann Arbor, MI 48109
United States

HOME PAGE: http://snehalbanerjee.github.io

Bradyn M. Breon-Drish

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Ron Kaniel

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

HOME PAGE: http://rkaniel.simon.rochester.edu

CEPR ( email )

London
United Kingdom

Ilan Kremer

Hebrew University of Jerusalem ( email )

20 Lila Street
Re'ut
Jerusalem
Israel

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

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