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Voluntary Disclosure of Bad News
Author(s) -
Suijs Jeroen
Publication year - 2005
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.0306-686x.2005.00634.x
Subject(s) - voluntary disclosure , business , private information retrieval , public disclosure , variable (mathematics) , variable cost , fixed cost , full disclosure , turnover , accounting , actuarial science , monetary economics , economics , computer security , computer science , management , mechanical engineering , mathematical analysis , mathematics , engineering
This paper shows that in a voluntary disclosure environment entailing both a fixed disclosure cost and a variable proprietary cost, partial disclosure equilibria may arise in which firms voluntarily disclose bad private information to the public. Furthermore, it is shown that such equilibria may arise more frequently as the threat of incuring proprietary cost increases and/or the proprietary cost itself increases.