Disclosure When the Market Is Unsure of Information Endowment of Managers

Jung, Woon-Oh; Kwon, Youngjin

doi:10.2307/2491118

Cited by 633 publications

(381 citation statements)

References 7 publications

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“…The voluntary disclosure research suggests that managers balance conflicting interests in deciding to disclose or withhold information (Verrecchia, 1983;Dye, 1986;Jung and Kwon, 1988). Ultimately, the decision to disclose is strategically driven by the nature of the information held by managers, incentives of managers, circumstances of the firm and expected reaction by investors to the disclosure.…”

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confidence: 99%

Continuous disclosure compliance: does corporate governance matter?

Chapple

Truong

2014

Accounting & Finance

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Our study investigates the quality of firms' continuous disclosure compliance during mandatory continuous disclosure reform, and whether the compliance quality is impacted by corporate governance, using the New Zealand market as the setting. We use a novel coding of different categories of disclosures (nonroutine, non-procedural and internal), which represents the extent of proprietary insider information inherent in disclosures, to evaluate firms' compliance quality. Our findings provide evidence that firms' compliance quality improved after the reform, and this improvement is inconsistently impacted by corporate governance. Our findings provide important implications for regulators in their quest for a superior disclosure regime.

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confidence: 99%

Continuous disclosure compliance: does corporate governance matter?

Chapple

Truong

2014

Accounting & Finance

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“…While investors can generally learn about the probability of information arrival from other peer firms, investors of informationally unique firms may have difficulties assessing when managers receive no new information and thus the absence of disclosure can be interpreted more negatively (e.g. Dye 1985, Jung andKwon 1988). In addition, difficulties in hedging positions for unique firms may discourage trading by certain types of investors (e.g.…”

Section: Informational Uniqueness and Disclosure Policymentioning

confidence: 99%

“…This may raise the uncertainty among investors as well as their assessed likelihood that the absence of disclosure by the underlying firm is due to deliberate information withholding by manager for strategic reasons rather than due to the absence of new information, consequently lowering the disclosure threshold for the underlying firm (Jung andKwon 1988, Dye andSridhar 1995). In addition, if information transfer is noisy and confirmatory discretionary disclosures are not so costly, investors may have a preference for firms providing discretionary disclosures to resolve the residual uncertainty or even just to confirm prior market expectations in response to peer disclosures.…”

Section: Panel B: Difference-in-difference With Matched Firms As Contmentioning

confidence: 99%

“…Verrecchia 1983) and as investors' perceptions on the probability that the firm receives information increase (e.g. Dye 1985, Jung andKwon 1988). The two most closely related theoretical papers using a multi-firm setting include Dye and Sridhar (1995) and Jorgensen and Kirschenheiter (2012).…”

Section: Related Literaturementioning

confidence: 99%

“…Non-disclosure by the underlying firm may be more likely interpreted as due to strategic information withholding instead of the absence of new information. An increased assessed probability of information arrival likely lowers the disclosure threshold for the underlying firm (Jung and Kwon 1988). For firms with many comparable public peers, they are more often exposed to such group disclosure dynamics whenever some peer firms provide discretionary disclosures (Dye and Sridhar 1995).…”

Section: Frequency Of Discretionary Disclosurementioning

confidence: 99%

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Informational Uniqueness, Corporate Disclosure, and Information Environment

Chau

2016

SSRN Journal

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This dissertation examines how the lack of comparable public peers ("informational uniqueness") is related to a firm's disclosure policy and information environment.Having less information spillover from other public firms may present an information deficiency if it is not compensated by other components of the information environment. Using textual similarity in business description among firms to measure the extent of peer presence, I find that informational uniqueness is associated with a higher propensity by firms to provide ongoing bundled guidance. This is consistent with firms attempting to mitigate the information deficiency through strengthening their tacit commitment to continued disclosure by providing more information regularly on predictable schedules. Overall, I find a strong negative relationship between informational uniqueness and the quality of corporate information environment only among firms without regular bundled guidance. My results suggest that, while informational uniqueness can generate significant information deficiency, firms with strong tacit commitment to ongoing disclosure are largely able to compensate for the lack of information spillover from peers.On the flip side, firms surrounded by many peers may be subject to the influence of peer dynamics on their disclosure behavior. While the presence of comparable public peers likely expands investors' information endowment on the base firm through information spillover on related exposures, discretionary disclosures by peer firms may also signal information arrival. This can raise investors' inferred probability that non-disclosure is due to strategic information withholding rather than the absence of new information. In relation to this, I show that the bid-ask spread of the base firm slightly increases when its closest peer initiates discretionary disclosures, but subsequently decreases upon disclosure by the base firm. In addition, I find that the number of comparable public peers is strongly positively associated with the frequency of discretionary disclosure. Overall, these results suggest that the presence of peer dynamics can induce firms with more peers to provide discretionary disclosures more frequently. This dissertation examines how the lack of comparable public peers ("informational uniqueness") is related to a firm's disclosure policy and information environment. Having less information spillover from other public firms may present an information deficiency if it is not compensated by other components of the information environment. Using textual similarity in business description among firms to measure the extent of peer presence, I find that informational uniqueness is associated with a higher propensity by firms to provide ongoing bundled guidance. This is consistent with firms attempting to mitigate the information deficiency through strengthening their tacit commitment to continued disclosure by providing more information regularly on predictable schedules.Overall, I find a strong negative relationship betwe...

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The Causal Link between Sustainable Disclosure and Information Asymmetry: The Moderating Role of the Stakeholder Protection Context

Martínez‐Ferrero¹,

Ruiz-Cano²,

García‐Sánchez³

2015

Corp Soc Responsibility Env

129

101

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The main focus in this study is on analyzing the effect that voluntary information disclosure concerning corporate social responsibility (CSR) has on information asymmetry and its evidence in the stakeholder protection context. The use of the generalized method of moments (GMM) estimator for an international sample of 575 for the period 2003 to 2009, highlights how voluntary disclosure regarding CSR aspects reduces the problems of asymmetric information between the different market agents, which is especially important in environments characterized by a strong focus and commitment to stakeholders. Moreover, voluntary disclosure of information could arise from the existence of private information and agency conflicts. Therefore and in addition, this evidence is complemented by showing the bidirectional relationship between voluntary disclosure and asymmetric information in such environments. Thus, greater asymmetric information leads to higher voluntary information disclosure practices, which are able to reduce the agency problem in environments characterized by strong socially responsible commitment.

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Disclosure When the Market Is Unsure of Information Endowment of Managers

Cited by 633 publications

References 7 publications

Continuous disclosure compliance: does corporate governance matter?

Continuous disclosure compliance: does corporate governance matter?

Informational Uniqueness, Corporate Disclosure, and Information Environment

The Causal Link between Sustainable Disclosure and Information Asymmetry: The Moderating Role of the Stakeholder Protection Context

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