Unbalanced Information and the Interaction between Information Acquisition, Operating Activities and Voluntary Disclosure

Posted: 1 Jul 2007

See all articles by Eti Einhorn

Eti Einhorn

Tel Aviv University

Amir Ziv

Columbia Business School

Abstract

As different activities cannot be measured or communicated with the same precision, accounting information is often only a partial and unbalanced reflection of the fundamental economics, emphasizing certain aspects of the underlying operations while disregarding others. We highlight this inherent imbalance in information as the source of an interaction between corporate operating and discretionary disclosure strategies, and thereby also as an important determinant of the information acquisition strategy. We demonstrate that information imbalance, via its distorting effect on operating activities, leads to a reduction in the propensity of managers to acquire information and provide voluntary disclosures.

Keywords: Financial accounting, Asymmetric information, Voluntary disclosure

JEL Classification: G14, M41, M45

Suggested Citation

Einhorn, Eti and Ziv, Amir, Unbalanced Information and the Interaction between Information Acquisition, Operating Activities and Voluntary Disclosure. Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=997302

Eti Einhorn (Contact Author)

Tel Aviv University ( email )

P.O. Box 39010
Ramat Aviv, Tel Aviv, 69978
Israel

Amir Ziv

Columbia Business School ( email )

3022 Broadway, 704 Uris
New York, NY 10027 10027
United States
212 854-3485 (Phone)
212 253-4095 (Fax)

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