Portal de Periódicos da CAPES

Voluntary Disclosure

1989; SAGE Publishing; Volume: 4; Issue: 4 Linguagem: Inglês

10.1177/0148558x8900400404

2160-4061

Alex Dontoh,

Financial Markets and Investment Strategies

The paper investigates incentives for firms to voluntarily disclose private information about future outcomes. A voluntary disclosure model that encompasses a competitive product market equilibrium and where proprietary (disclosure costs) costs are endogenously determined is presented. Possible explanations for empirical phenomena such as why value-maximizing firms voluntarily disclose unfavorable information (disclosures that cause investors to lower their expectations of firm earnings) when such disclosures tend to result in significant market price declines is provided. Existence of a unique Nash equilibrium where firms exercise discretion over such disclosures is demonstrated, and implications for extant empirical research on voluntary disclosures are discussed.