Voluntary Disclosures and Information Production By Analysts

42 Pages Posted: 19 Jun 2006

See all articles by Nisan Langberg

Nisan Langberg

Tel Aviv University - Coller School of Management

Shiva Sivaramakrishnan

Rice University

Date Written: September 28, 2007

Abstract

We analyze the voluntary disclosure decision of a manager when analysts scrutinize the quality of disclosure. We derive an equilibrium in which managers voluntarily disclose unfavorable information only if sufficiently precise, but disclose favorable news with lower levels of accuracy. We show that analysts cover good news disclosures with higher scrutiny. To the extent analysts rely on mandatory financial reports to interpret voluntary disclosures, we show that more precise financial reports may lead to more precise but less frequent voluntary disclosures. Moreover, a slant toward conservatism in financial reports can lead to less precise yet more frequent voluntary disclosures.

Keywords: Voluntary disclosure, Conservatism, Accounting precision, Financial analysts

JEL Classification: G14

Suggested Citation

Langberg, Nisan and Sivaramakrishnan, Shiva, Voluntary Disclosures and Information Production By Analysts (September 28, 2007). Available at SSRN: https://ssrn.com/abstract=909549 or http://dx.doi.org/10.2139/ssrn.909549

Nisan Langberg

Tel Aviv University - Coller School of Management ( email )

Tel Aviv
Israel

Shiva Sivaramakrishnan (Contact Author)

Rice University ( email )

6100 South Main Street
Houston, TX 77005-1892
United States

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