Abstract. This paper models the relation between a firm's market value and accounting data concerning operating and financial activities. Book value equals market value for financial activities, but they can differ for operating activities. Market value is assumed to equal the net present value of expected future dividends, and is shown, under clean surplus accounting, to also equal book value plus the net present value of expected future abnormal earnings (which equals accounting earnings minus an interest charge on opening book value). A linear model specifies the dynamics of an information set that includes book value and abnormal earnings for operating activities. Model parameters represent persistence of abnormal earnings, growth, and accounting conservatism. The model is sufficiently simple to permit derivation of closed form expressions relating market value to accounting data and other information. Three kinds of analyses develop from the model. The first set deals with value as it relates to anticipated realizations of accounting data. The second set examines in precise terms how value depends on contemporaneous realizations of accounting data. The third set examines asymptotic relations comparing market value to earnings and book values, and how earnings relate to beginning of period book values. The paper demonstrates that in all three sets of analyses the conclusions hinge on the extent to which the accounting is conservative as opposed to unbiased. Further, the absence/presence of growth in operating activities is relevant if, and only if, the accounting is conservative. Résumé. Les auteurs présentent sous forme de modèle la relation entre la valeur marchande d'une entreprise et les données comptables relatives à ses activités d'exploitation et ses activités financières. La valeur comptable est égale à la valeur marchande lorsqu'il s'agit d'activités financières, mais elle peut être différente dans le cas des activités d'exploitation. Les auteurs supposent que la valeur marchande est égale à la valeur actualisée nette des dividendes futurs prévus et démontrent que, lorsqu'on applique la méthode du résultat global, la valeur marchande est aussi égale à la valeur comptable additionnée de la valeur actualisée nette des bénéfices extraordinaires futurs prévus (qui sont égaux aux bénéfices comptables diminués de frais d'intérêt implicites sur la valeur comptable nette). Un modèle linéaire précise la dynamique d'un ensemble de données, incluant la valeur comptable et les bénéfices extraordinaires, relatives aux activités d'exploitation. Les paramètres du modèle traduisent la persistance des bénéfices extraordinaires, la croissance et le principe de prudence. Le modèle est suffisamment simple pour permettre de dériver des expressions fermées qui mettent en relation la valeur marchande et les données comptables et autres. Du modèle se dégagent trois formes d'analyses. La première porte sur la valeur, dans sa relation avec la matérialisation anticipée des données comptables. La deuxième porte sur l'examen p...

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Abstract. A key characteristic of the reporting of private management infonnation is that managers do not always report their information, and they reveal or withhold both "good" and "bad" news. Several recent papers provide models of managers' voluntary disclosure decisions. These models are typically constructed so that managers do not always disclose or withhold their information, despite rational behavior by both the privately informed managers and interested uninformed parties external to the firm. Our paper seeks to contribute further to this literature by developing a richer model of the forces that might influence a manager's decision to disclose private information. Our model is a direct extension of the model in Darrough and Stoughton (1990). In our model, there is a continuum of possible private incumbent signals and the entrant may be privately informed about the cost of entry. Partial disclosure of private infonnation results from the tension that exists between an informed manager's desire to communicate good news to (and hide bad news from) the capital market and his desire to cotnmutiicate bad news to (and hide good news from) competitors in the firm's product market.Resume. La communication par la direction de rinformation privilegiee qu'elle detient presente une caracteristique determinante: les gesUonnaires ne font pas toujours etat de cette information, et ils revelent ou retiennent rinformation aussi bien « positive » que « negative ». Dans plusieurs etudes recentes sont proposes des modeles decisiotmels en matiere de presentation volontaire d'information par les gestionnaires. Ces modeles sont habituellement construits de telle sone que les gestionnaires ne cotnmuniquent ou tie retiennent pas toujours l'information, malgre le comportement rationnel affiche tant par les gestionnaires depositaires de rinformation privilegiee que par les parties interessees exterieures a l'entreprise qui ne disposent pas de cette information. Les auteurs ont voulu ici enrichir ces etudes en elaborant un module plus etoffe des forces susceptibles d'influer sur la decision du gestionnaire de communiquer l'information privilegiee dont il dispose. EDITOR s NOTE: an earlier draft of this paper and the discussion by Ed Nosal (see pp. [81][82][83][84][85] IntroductionManagers frequently acquire information about their firm's future profitability as part of the management process. To the extent that this information is not known by others, we refer to it as private management information. Managers can voluntarily reveal their private information by issuing reports, such as management forecasts of future eamings. We observe that, from time to time, managers issue such reports, but the criteria they use in determining whether to make them is not well understood.A key characteristic of the reporting of private management information is that managers do not always report information and they reveal, or withhold, both "good" and "bad" news. Several recent papers provide models of managers' voluntary disclosure decisions. ...