Credibility of Voluntary Disclosure
Volume: Volume 31, No. 2
Issue: Summer 2000
Pages: pp. 359-374
Authors: Phillip C. Stocken
Title: Credibility of Voluntary Disclosure
Abstract: I examine the credibility of a manager's disclosure of privately observed nonverifiable information to an investor in a repeated cheap-talk game setting. In the single-period game no communication occurs. In the repeated game, however, the manager almost always truthfully reveals his private information provided the manager is sufficiently patient, the accounting report is sufficiently useful for assessing the truthfulness of the manager's voluntary disclosure, and the manager's disclosure performance is evaluated over a sufficiently long period. These factors may explain a manager's propensity to release private information to investors.
JEL Classification
Accounting (M410)
Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance (G340)
Search, Learning, and Information (D830)
Accounting
Information