No. 90: Information leaks and voluntary disclosure

Abstract

We study managers’ decisions to voluntarily disclose information to the capital market when they face a risk of information leakage. Our analysis offers three main insights. First, we find that leaks that are less informative create market discipline and motivate more voluntary disclosure. Second, an increasing likelihood of information leakage has ambiguous effects. It fosters market discipline but increases managers’ rewards from successful nondisclosure. Consequently, a higher likelihood of leakage impedes disclosure if leaks represent rare events and fosters voluntary disclosure if leaks are sufficiently probable. Third, we find that market discipline is more effective for myopic managers who focus on short-term prices and cannot react to information leaks on a timely basis. Such managers are willing to preempt iinformation leakage and to disclose their private information.

Beteiligte Institutionen

Die Hauptstandorte vom TRR 266 sind die Universität Paderborn (Sprecherhochschule), die HU Berlin und die Universität Mannheim. Alle drei Standorte sind seit vielen Jahren Zentren für Rechnungswesen- und Steuerforschung. Hinzu kommen Wissenschaftler der LMU München, der Frankfurt School of Finance and Management, der WHU – Otto Beisheim School of Management, der ESMT Berlin, der Goethe-Universität Frankfurt und der Carl von Ossietzky Universität Oldenburg, die die gleiche Forschungsagenda verfolgen.