Information Externalities and Voluntary Disclosure PDF Download

Author: Young Jun Cho
Publisher:
ISBN:
Category :
Languages : en
Pages : 52

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Book Description
We examine the relation between information externalities along the supply chain and voluntary disclosure. Information transfers from a major customer's earnings announcement (EA) can substitute for its supplier's disclosure. Conversely, if the customer's EA increases uncertainties regarding the supplier's future prospects, it can increase the demand for disclosure. After controlling for information incorporated in supplier returns, we find that the supplier is more likely to issue earnings guidance after the customer's EA when the EA news deviates more from the market's expectation. The positive effect of the customer's news on earnings guidance is weaker when common investors, supply-chain analysts, or a common industry allow investors to better understand the value implications of the news, while the effect increases with the importance of the customer to the supplier. The effect is also stronger when the EA news is negative than positive. Collectively, the results suggest that supply-chain relationships influence voluntary disclosure.

Author: Ester Chen
Publisher:
ISBN:
Category :
Languages : en
Pages : 50

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Book Description
Studies comparing IFRS with U.S. GAAP generally focus on differences in the attributes and consequences of the recognized financial items. We, in contrast, focus on voluntary disclosure resulting from arguably the most significant difference between IFRS and GAAP: the capitalization of development costs, the “D” of R&D, required by IFRS but prohibited by GAAP. We document on a sample of Israeli high-technology and science-based firms, some using IFRS and others U.S. GAAP, a significant externality of IFRS development cost capitalization in the form of extensive voluntary disclosure of forward-looking information on product pipeline development and its expected consequences. A disclosure which, we document, is value-relevant to investors beyond the mandated financial information, including the capitalized R&D asset. We also show that the capitalized development costs (an asset) is highly significant in relation to stock prices, and enhances the relevance of the voluntary disclosures. Our results are robust to controlling for self-selection, propensity to disclose voluntarily, and other confounding factors. In the on-going debate about the proper accounting for R&D (the FASB has recently placed an intangibles project on its agenda), such a value-relevant disclosure externality should be of interest to both standard-setters and researchers.#

Author: Anat R. Admati
Publisher:
ISBN:
Category : Disclosure of information
Languages : en
Pages : 52

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Book Description

Author: Julien Manili
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
Disclosure about most externality-related product attributes is not mandatory, and consumers have to rely on the information strategically disclosed by manufacturers. I study consumer perceptions in the voluntary disclosure model of Grossman (1981) and show that dirty manufacturers can mislead consumers about externalities by exploiting a phenomenon of wishful belief formation. The analysis is based on a novel approach to level-k thinking incorporating the psychology of belief formation. Bounded reasoning prevents consumers from deducing production processes from disclosure behavior. The resulting subjective uncertainty gives bite to wishful belief formation, which manufacturers can exploit through a strategic use of vagueness. These misperceptions reduce the pressure of the demand side on dirty production and unravel the clean market, with important implications for the role of mandatory disclosure to regulate externalities.

Author: Anat R. Admati
Publisher:
ISBN:
Category :
Languages : en
Pages : 43

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Book Description
In this paper we analyze a model of voluntary disclosure by firms in financial markets. We focus on externalities that arise when firm values are correlated and the disclosures made by one firm affect the valuation of other firms. In our model, firms can choose the precision of their disclosure, and disclosure, which is costly, has social value. In the case of one firm, we uncover interesting economies of scale in the value of the disclosure, which lead to discontinuities in the optimal disclosure policy as parameters of the model change. For example, the optimal precision may jump from zero to a positive level when the prior precision regarding the firm's value is at a threshold level. For the case of multiple firms, we show that because of the externality in the firms' valuation, the Nash equilibrium disclosure policies are often socially inefficient. Thus, there is scope for disclosure regulation to improve welfare. We study the possibilities of mandating a minimal precision level for the disclosure or setting a system of subsidies that reduce the perceived cost of disclosure. While both methods can sometimes improve welfare, for each method there are cases (where firms differ in their cost or other parameters) where welfare is not improved. Neither of these methods of regulation dominates the other in all situations.

Author: Stephen R. Moehrle
Publisher: Emerald Group Publishing
ISBN: 1781907641
Category : Business & Economics
Languages : en
Pages : 298

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Book Description
Accounting scandals such as Enron and WorldCom ushered in several regulatory overhauls including Sarbanes-Oxley. This monograph summarizes and synthesize a decade of academic research to develop an evolving dominant explanation around these myriad changes.

Author: Stephen G. Ryan
Publisher: John Wiley & Sons
ISBN: 0470139579
Category : Business & Economics
Languages : en
Pages : 616

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Book Description
This book is an authoritative guide to the accounting and disclosure rules for financial institutions and instruments. It provides guidance from a “fair value” perspective and demonstrates the simplest and most natural measurement basis for reporting financial instruments, as is relevant for thrifts, mortgage banks, commercial banks, and property-casualty and life insurers.

Author: Harvard Law Review
Publisher: Quid Pro Books
ISBN: 161027881X
Category : Law
Languages : en
Pages : 413

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Book Description
The Harvard Law Review is offered in a digital edition, featuring active Contents and URLs, linked notes, and proper ebook formatting. The contents of Issue 8 include: Article, "Racial Capitalism," by Nancy Leong Essay, "Shallow Signals," by Bert I. Huang Book Review, "All Unhappy Families: Tales of Old Age, Rational Actors, and the Disordered Life," by Ariela R. Dubler Book Review, "Lawyers, Law, and the New Civil Rights History," by Risa Goluboff Note, "Recasting the U.S. International Trade Commission’s Role in the Patent System" Note, "Juvenile Miranda Waiver and Parental Rights" Note, "The Province of the Jurist: Judicial Resistance to Expert Testimony on Eyewitnesses as Institutional Rivalry" Note, "Proposing a Locally Driven Entrepreneur Visa" In addition, the issue features student commentary on Recent Cases, including such subjects as Illinois’s ban on public carry of firearms, "bookmarking" of infringing material as a copyright violation, causation and criminals' statutory restitution, free movement rights in the EU, local bottling and the dormant commerce clause, and binding unnamed class members with a denial of class action certification. Finally, the issue includes notes on Recent Publications as well as a comprehensive Index to Volume 126 (2012-2013).

Author: Robert S. Pindyck
Publisher: World Bank Publications
ISBN:
Category : Capital investments
Languages : en
Pages : 58

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Book Description
Irreversible investment is especially sensitive to such risk factors as volatile exchange rates and uncertainty about tariff structures and future cash flows. If the goal of macroeconomic policy is to stimulate investment, stability and credibility may be more important than tax incentives or interest rates.

Author: Eugénio, Teresa
Publisher: IGI Global
ISBN: 1799894126
Category : Business & Economics
Languages : en
Pages : 345

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Book Description
There has been an increased interest in social and environmental issues in recent years as more consideration is given to the idea of sustainability and social accounting. Social accounting can be considered a straightforward manifestation of corporate enforcement to legitimize, explain, and justify the organization’s activities or an ethically desirable component of any well-functioning democracy. Social accounting can also include environmental accounting, which is focused on environmental issues. Additional study is required to better understand the relevancy of social and environmental accounting in today’s modern business world. Modern Regulations and Practices for Social and Environmental Accounting discusses social and environmental accounting and considers regulations, norms, organizational practices, and the challenges of education. Covering a range of topics such as non-financial reporting and corporate social responsibility, this reference work is ideal for industry professionals, researchers, academicians, managers, practitioners, instructors, and students.