IDEAS home Printed from https://ideas.repec.org/a/bla/jbfnac/v30y2003i9-10p1327-1339.html
   My bibliography  Save this article

Voluntary Disclosure of Nonproprietary Information: A Complete Equilibrium Characterization

Author

Listed:
  • Evelyn Korn
  • Ulf Schiller

Abstract

The so‐called disclosure principle is a ‘puzzle’ in the accounting literature: Game theoretic models of financial markets show that in equilibrium firms should disclose all their private information. Yet, the result is not convincing. Researchers have therefore built sophisticated models in order to demonstrate for which reasons the disclosure principle might fail. This note shows that even in the original model there are multiple equilibria. In those equilibria good types disclose and bad types do not. The commonly known full disclosure equilibrium is a limit point of the equilibrium set.

Suggested Citation

  • Evelyn Korn & Ulf Schiller, 2003. "Voluntary Disclosure of Nonproprietary Information: A Complete Equilibrium Characterization," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(9‐10), pages 1327-1339, December.
    • Handle: RePEc:bla:jbfnac:v:30:y:2003:i:9-10:p:1327-1339
    DOI: 10.1111/j.0306-686X.2003.05494.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.0306-686X.2003.05494.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.0306-686X.2003.05494.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Farrell, Joseph & Gibbons, Robert, 1989. "Cheap Talk with Two Audiences," American Economic Review, American Economic Association, vol. 79(5), pages 1214-1223, December.
    2. repec:hoo:wpaper:e-89-7 is not listed on IDEAS
    3. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
    4. Darrough, Masako N. & Stoughton, Neal M., 1990. "Financial disclosure policy in an entry game," Journal of Accounting and Economics, Elsevier, vol. 12(1-3), pages 219-243, January.
    5. Jung, Wo & Kwon, Yk, 1988. "Disclosure When The Market Is Unsure Of Information Endowment Of Managers," Journal of Accounting Research, Wiley Blackwell, vol. 26(1), pages 146-153.
    6. In-Koo Cho & David M. Kreps, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 179-221.
    7. Dye, Ronald A, 1986. "Proprietary and Nonproprietary Disclosures," The Journal of Business, University of Chicago Press, vol. 59(2), pages 331-366, April.
    8. G.A. Feltham & J.Z. Xie, 1992. "Voluntary financial disclosure in an entry game with continua of types," Contemporary Accounting Research, John Wiley & Sons, vol. 9(1), pages 46-80, September.
    9. Verrecchia, Robert E., 1983. "Discretionary disclosure," Journal of Accounting and Economics, Elsevier, vol. 5(1), pages 179-194, April.
    10. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
    11. Wagenhofer, Alfred, 1990. "Voluntary disclosure with a strategic opponent," Journal of Accounting and Economics, Elsevier, vol. 12(4), pages 341-363, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bruno Meirelles Salotti & Marina Mitiyo Yamamoto, 2005. "Essay on the Theory of Disclosure," Brazilian Business Review, Fucape Business School, vol. 2(1), pages 52-68, January.
    2. Goncharenko, Roman & Hledik, Juraj & Pinto, Roberto, 2018. "The dark side of stress tests: Negative effects of information disclosure," Journal of Financial Stability, Elsevier, vol. 37(C), pages 49-59.
    3. Mark Bagnoli & Susan G. Watts, 2007. "Financial Reporting and Supplemental Voluntary Disclosures," Journal of Accounting Research, Wiley Blackwell, vol. 45(5), pages 885-913, December.
    4. Roland K�nigsgruber, 2012. "Capital Allocation Effects of Financial Reporting Regulation and Enforcement," European Accounting Review, Taylor & Francis Journals, vol. 21(2), pages 283-296, August.
    5. Her‐Jiun Sheu & Huimin Chung & Chih‐Liang Liu, 2010. "Comprehensive Disclosure of Compensation and Firm Value: The Case of Policy Reforms in an Emerging Market," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 37(9‐10), pages 1115-1144, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Verrecchia, Robert E., 2001. "Essays on disclosure," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 97-180, December.
    2. Suijs, Jeroen, 2007. "Voluntary disclosure of information when firms are uncertain of investor response," Journal of Accounting and Economics, Elsevier, vol. 43(2-3), pages 391-410, July.
    3. Richard Frankel & Joshua Lee & Zawadi Lemayian, 2018. "Proprietary costs and sealing documents in patent litigation," Review of Accounting Studies, Springer, vol. 23(2), pages 452-486, June.
    4. Beyer, Anne & Cohen, Daniel A. & Lys, Thomas Z. & Walther, Beverly R., 2010. "The financial reporting environment: Review of the recent literature," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 296-343, December.
    5. Arya, Anil & Mittendorf, Brian, 2013. "Discretionary disclosure in the presence of dual distribution channels," Journal of Accounting and Economics, Elsevier, vol. 55(2), pages 168-182.
    6. Einhorn, Eti, 2007. "Voluntary disclosure under uncertainty about the reporting objective," Journal of Accounting and Economics, Elsevier, vol. 43(2-3), pages 245-274, July.
    7. Konrad Lang, 2018. "Voluntary Disclosure and Analyst Forecast," European Accounting Review, Taylor & Francis Journals, vol. 27(1), pages 23-36, January.
    8. Thakor, Anjan V., 2015. "Strategic information disclosure when there is fundamental disagreement," Journal of Financial Intermediation, Elsevier, vol. 24(2), pages 131-153.
    9. Greg Clinch & Robert E. Verrecchia, 1997. "Competitive Disadvantage and Discretionary Disclosure in Industries," Australian Journal of Management, Australian School of Business, vol. 22(2), pages 125-137, December.
    10. Bruce Ian Carlin & Shaun William Davies & Andrew Miles Iannaccone, 2010. "Competing for Attention in Financial Markets," NBER Working Papers 16085, National Bureau of Economic Research, Inc.
    11. King, Ronald R. & Wallin, David E., 1995. "Experimental tests of disclosure with an opponent," Journal of Accounting and Economics, Elsevier, vol. 19(1), pages 139-167, February.
    12. Young Jun Cho, 2015. "Segment Disclosure Transparency and Internal Capital Market Efficiency: Evidence from SFAS No. 131," Journal of Accounting Research, Wiley Blackwell, vol. 53(4), pages 669-723, September.
    13. Peter M. Clarkson & Jennifer L. Kao & Gordon D. Richardson, 1994. "The Voluntary Inclusion of Forecasts in the MD&A Section of Annual Reports," Contemporary Accounting Research, John Wiley & Sons, vol. 11(1), pages 423-450, June.
    14. repec:cte:idrepe:id-10-06 is not listed on IDEAS
    15. Ackert, Lucy F. & Church, Bryan K. & Sankar, Mandira Roy, 2000. "Voluntary disclosure under imperfect competition: experimental evidence," International Journal of Industrial Organization, Elsevier, vol. 18(1), pages 81-105, January.
    16. Jeremy Bertomeu & Davide Cianciaruso, 2018. "Verifiable disclosure," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(4), pages 1011-1044, June.
    17. Gago Rodríguez, Susana, 2010. "Evolutionary model of existing competition and voluntary disclosure," IC3JM - Estudios = Working Papers id-10-06, Instituto Mixto Carlos III - Juan March de Ciencias Sociales (IC3JM).
    18. Suijs, J.P.M., 2001. "Voluntary Disclosure and Risk Sharing," Other publications TiSEM 3e46a432-675f-4110-936d-b, Tilburg University, School of Economics and Management.
    19. Marshall, Andrew P. & Weetman, Pauline, 2002. "Information asymmetry in disclosure of foreign exchange risk management: can regulation be effective?," Journal of Economics and Business, Elsevier, vol. 54(1), pages 31-53.
    20. Peter M. Clarkson & Jennifer L. Kao & Gordon D. Richardson, 1994. "La présentation volontaire d'information à caractère prévisionnel dans le rapport de gestion intégré aux rapports annuels," Contemporary Accounting Research, John Wiley & Sons, vol. 11(1), pages 451-488, June.
    21. Jesse A. Ellis & C. Edward Fee & Shawn E. Thomas, 2012. "Proprietary Costs and the Disclosure of Information About Customers," Journal of Accounting Research, Wiley Blackwell, vol. 50(3), pages 685-727, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jbfnac:v:30:y:2003:i:9-10:p:1327-1339. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0306-686X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.