Not Only What but Also When: A Theory of Dynamic Voluntary Disclosure
- (pp. 2400-2420)
AbstractWe examine a dynamic model of voluntary disclosure of multiple pieces of private information. In our model, a manager of a firm who may learn multiple signals over time interacts with a competitive capital market and maximizes payoffs that increase in both period prices. We show (perhaps surprisingly) that in equilibrium later disclosures are interpreted more favorably even though the time the manager obtains the signals is independent of the value of the firm. We also provide sufficient conditions for the equilibrium to be in threshold strategies.
Citation2014. "Not Only What but Also When: A Theory of Dynamic Voluntary Disclosure." American Economic Review, 104 (8): 2400-2420. DOI: 10.1257/aer.104.8.2400
- D21 Firm Behavior: Theory
- D82 Asymmetric and Private Information; Mechanism Design
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- L25 Firm Performance: Size, Diversification, and Scope