Corporate Responses to Increased Disclosure Requirements

Posted: 8 May 1995


This paper shows that greater disclosure requirements may induce firms to reduce strictly their value relevant disclosures. In the absence of segment reporting requirements, an incumbent firm may voluntarily disclose value relevant information because it can use other, value irrelevant, information to jam proprietary disclosures. However, when required to disclose segment data, the incumbent may have to aggregate proprietary information with other value relevant information to avoid proprietary disclosures. This results in the firm not disclosing value relevant information which it would otherwise have revealed voluntarily. Thus, a standard setter can actually decrease the price efficiency by requiring more disaggregate disclosures.

JEL Classification: G41

Suggested Citation

Nagarajan, Nandu J. and Sridharan, Swaminathan, Corporate Responses to Increased Disclosure Requirements. Available at SSRN:

Nandu J. Nagarajan (Contact Author)

University of Texas at Arlington ( email )

415 S West St Apt no 205
Arlington, TX 76019
United States

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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