Dynamic Information Disclosure

Dierker, Martin; Subrahmanyam, Avanidhar

doi:10.1111/1911-3846.12225

Cited by 9 publications

(7 citation statements)

References 68 publications

(99 reference statements)

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“…7 7Additional motivation for modeling a dynamic relation between disclosure and the cost of equity can be found in the theoretical rational expectation models where investors and firms can learn from prices including, in particular, the implied cost of equity. See, for example, Diamond and Verrecchia (1981) for a one‐period application and Holden and Subrahmanyam (1996), as well as Dierker and Subrahmanyam (2017), for an application of multiperiod rational expectations models.…”

mentioning

confidence: 99%

Endogeneity and the Dynamics of Voluntary Disclosure Quality: Is there Really an Effect on the Cost of Equity Capital?*

Eugster

2020

Contemporary Accting Res

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Research on the effects of voluntary disclosure quality on the cost of equity capital is often plagued by endogeneity concerns. In this paper, I use a dynamic panel system GMM estimator, which provides internal instruments from the firm's history that directly address endogeneity arising from unobserved heterogeneity and simultaneity. By using hand-collected voluntary disclosure scores for firms listed in the Swiss stock exchange, I examine the dynamic relation between voluntary disclosure quality and the cost of equity capital in a panel over a period of 10 years. The results suggest that the relation between voluntary disclosure quality and the cost of equity capital becomes insignificant after controlling adequately for potential dynamic endogeneity, simultaneity, and unobserved heterogeneity.

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confidence: 99%

Endogeneity and the Dynamics of Voluntary Disclosure Quality: Is there Really an Effect on the Cost of Equity Capital?*

Eugster

2020

Contemporary Accting Res

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“…The identification of the determinants of disclosure timing could prompt stakeholders (including policy-makers, software producers, and vulnerability markets) to take actions to shift the frequency of disclosure towards an optimal value. Finally, our research builds on and extends the contributions of the literature on open source software development (Jiang and Sarkar 2003-10, Krishnamurthy and Tripathi 2009, Krishnamurthy et al 2014, von Krogh et al 2012, Roberts et al 2006) and information disclosure timing (Dierker and Subrahmanyam 2017, McNichols 1988, Scott 1994.…”

Section: Our Contributionsmentioning

confidence: 83%

“…2012, Roberts et al. 2006) and information disclosure timing (Dierker and Subrahmanyam 2017, McNichols 1988, Scott 1994).…”

Section: Introductionmentioning

confidence: 99%

Determinants of Software Vulnerability Disclosure Timing

Sen

Choobineh

Kumar

2020

Production and Operations Management

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The timing of vulnerability disclosures (by vulnerability discoverers) has significant implications for software producers and users. Immediate disclosure (before a patch becomes available) could result in exploits with subsequent harm to installed systems. Therefore, it is important to understand the determinants of this timing. In this study, we investigate the impacts of (i) the perception of the vulnerability discoverer about the software producer, (ii) the type of vulnerable software, and (iii) the severity of the vulnerability, on a vulnerability discoverer's choice of disclosure timing. We collect data from three different sources and control for the vulnerability discoverer's motivations and beliefs. Our results indicate that those who perceive a software producer to be timely in its patch release, reward it by delaying the disclosure. We also find that it is more likely that the disclosure is delayed for open source software and it is less likely that the disclosure is delayed for more severe vulnerabilities. The findings of this study are relevant to software producers in their decision‐making process on resource allocation for software patches and should also help policy‐makers to devise regulations relevant to the timing of disclosures and patch releases. Furthermore, these findings could be relevant to software consumers searching for a particular software product that they would like to use. This study attempts to provide insights into an ongoing discussion in the operations management community regarding how to allocate and divide resources between software development and software maintenance.

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“…In the context of strategic voluntary disclosure, to the extent that managers calibrate their disclosures in relation to their desire to learn from secondary markets, an important consideration is that disclosure comes at a cost: the loss of market feedback. Disclosure allows prices to impound information known to managers, which can crowd out unknown information and render prices less informative to the managers (e.g., Gao and Liang [2013], Dierker and Subrahmanyam [2017]). Therefore, from a strategic disclosure perspective, if managers believe that they can obtain more information feedback from trading in the firm's securities and derivatives by disclosing less, they will do so.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

Talk Less, Learn More: Strategic Disclosure in Response to Managerial Learning from the Options Market

Chen

Yang

2021

J of Accounting Research

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We examine how options trading affects voluntary corporate disclosure, so that we can shed light on whether managers’ potential learning from the options market induces them to withhold disclosure. We find that options trading reduces the likelihood and frequency of management earnings forecasts, suggesting that firms that have active options trading on their stock make fewer voluntary disclosures. This finding is in accordance with the theoretical prediction that managers strategically reduce disclosure to avoid crowding out informed trading, which can give them informative feedback for their decision making. In support of the managerial learning channel, we document a real effect of reduced disclosure: When managers disclose less, options trading has a stronger positive effect on firm investment efficiency. The more pronounced effect of options trading on management earnings forecasts when the need for managerial learning is higher further supports the learning channel.

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Dynamic Information Disclosure

Cited by 9 publications

References 68 publications

Endogeneity and the Dynamics of Voluntary Disclosure Quality: Is there Really an Effect on the Cost of Equity Capital?*

Endogeneity and the Dynamics of Voluntary Disclosure Quality: Is there Really an Effect on the Cost of Equity Capital?*

Determinants of Software Vulnerability Disclosure Timing

Talk Less, Learn More: Strategic Disclosure in Response to Managerial Learning from the Options Market

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