Voluntary Disclosure

Bischof studies how firm-specific and manager-specific preferences affect voluntary disclosure behavior. The project empirically investigates corporate risk disclosure behavior by focusing on recent political shocks such as the “Brexit” referendum or tax scandals. These political shocks serve as a suitable instrument to disentangle firm characteristics and manager characteristics, which typically overlap to a large extent. The settings also allow to study how investors improve transparency by acting on current and stale disclosure after experiencing unexpected shocks to their information environment.

  • Research Question

    How do firms create transparency by voluntary risk reporting, and how is this shaped by managerial preferences?

  • Motivation

    Management’s reporting incentives drive disclosure choices and a more thorough understanding of these reporting incentives is at the very core of modern accounting research. Many questions surrounding these reporting incentives are still unresolved. In particular, management’s rationale for voluntary disclosure decisions is rarely observable and, even if it is, the decisions are frequently bundled with other operating choices (e.g., the level of risk-taking) rendering empirical identification challenging. Firm exposure to political and macroeconomic risk has received increasing attention in the accounting and finance literature. Therefore, corporate disclosures of these risks provide a recent and useful setting to address and disentangle the distinct types of determinants.

  • Research Program

    We study how firm-specific and manager-specific preferences affect voluntary disclosure behavior. We empirically investigate corporate risk disclosure behavior by focusing on recent political shocks such as the “Brexit” referendum or tax scandals. These political shocks serve as a suitable instrument to disentangle firm characteristics and manager characteristics, which typically overlap to a large extent. The settings also allow studying how investors improve transparency by acting on current and stale disclosure after experiencing unexpected shocks to their information environment.

  • Contribution

    The project will provide a better understanding of reporting incentives, therewith helping users to interpret disclosure choices and regulators to assess costs and benefits.

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Participating Institutions

TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, WHU – Otto Beisheim School of Management, European School of Management and Technology in Berlin and Goethe University Frankfurt who share the same research agenda.