Information disclosure quality: correlation versus precision
We investigate how a multidimensional disclosure quality (i.e., correlation and precision) determines an optimal information disclosure strategy. We find that, for an infinitely lived, unlevered firm with market perfection, a truth-telling disclosure is optimal at increasing the expected firm value....
| Main Authors: | , |
|---|---|
| Format: | Journal Article |
| Published: |
Wiley-Blackwell Publishing Asia
2017
|
| Online Access: | http://hdl.handle.net/20.500.11937/54701 |
| _version_ | 1848759437318160384 |
|---|---|
| author | Hu, Wei Cheung, Adrian |
| author_facet | Hu, Wei Cheung, Adrian |
| author_sort | Hu, Wei |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | We investigate how a multidimensional disclosure quality (i.e., correlation and precision) determines an optimal information disclosure strategy. We find that, for an infinitely lived, unlevered firm with market perfection, a truth-telling disclosure is optimal at increasing the expected firm value. However, for a finitely lived, levered firm in the presence of market imperfections (e.g., bankruptcy cost), the optimal disclosure quality depends negatively on the level of imperfections. Once we consider the agency problem, such dependence can become positive, thereby highlighting the importance of a proper managerial-incentive scheme to align the information disclosure interests of managers and shareholders. |
| first_indexed | 2025-11-14T09:59:52Z |
| format | Journal Article |
| id | curtin-20.500.11937-54701 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T09:59:52Z |
| publishDate | 2017 |
| publisher | Wiley-Blackwell Publishing Asia |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-547012019-06-26T23:39:25Z Information disclosure quality: correlation versus precision Hu, Wei Cheung, Adrian We investigate how a multidimensional disclosure quality (i.e., correlation and precision) determines an optimal information disclosure strategy. We find that, for an infinitely lived, unlevered firm with market perfection, a truth-telling disclosure is optimal at increasing the expected firm value. However, for a finitely lived, levered firm in the presence of market imperfections (e.g., bankruptcy cost), the optimal disclosure quality depends negatively on the level of imperfections. Once we consider the agency problem, such dependence can become positive, thereby highlighting the importance of a proper managerial-incentive scheme to align the information disclosure interests of managers and shareholders. 2017 Journal Article http://hdl.handle.net/20.500.11937/54701 10.1111/acfi.12282 Wiley-Blackwell Publishing Asia fulltext |
| spellingShingle | Hu, Wei Cheung, Adrian Information disclosure quality: correlation versus precision |
| title | Information disclosure quality: correlation versus precision |
| title_full | Information disclosure quality: correlation versus precision |
| title_fullStr | Information disclosure quality: correlation versus precision |
| title_full_unstemmed | Information disclosure quality: correlation versus precision |
| title_short | Information disclosure quality: correlation versus precision |
| title_sort | information disclosure quality: correlation versus precision |
| url | http://hdl.handle.net/20.500.11937/54701 |