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Voluntary Disclosure of Nonproprietary Information: A Complete Equilibrium Characterization

Voluntary Disclosure of Nonproprietary Information: A Complete Equilibrium Characterization The so‐called disclosure principle is a ‘puzzle’ in the accounting literature: Game theoretic models of financial markets show that in equilibrium firms should disclose all their private information. Yet, the result is not convincing. Researchers have therefore built sophisticated models in order to demonstrate for which reasons the disclosure principle might fail. This note shows that even in the original model there are multiple equilibria. In those equilibria good types disclose and bad types do not. The commonly known full disclosure equilibrium is a limit point of the equilibrium set. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Finance & Accounting Wiley

Voluntary Disclosure of Nonproprietary Information: A Complete Equilibrium Characterization

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References (16)

Publisher
Wiley
Copyright
Copyright © 2003 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0306-686X
eISSN
1468-5957
DOI
10.1111/j.0306-686X.2003.05494.x
Publisher site
See Article on Publisher Site

Abstract

The so‐called disclosure principle is a ‘puzzle’ in the accounting literature: Game theoretic models of financial markets show that in equilibrium firms should disclose all their private information. Yet, the result is not convincing. Researchers have therefore built sophisticated models in order to demonstrate for which reasons the disclosure principle might fail. This note shows that even in the original model there are multiple equilibria. In those equilibria good types disclose and bad types do not. The commonly known full disclosure equilibrium is a limit point of the equilibrium set.

Journal

Journal of Business Finance & AccountingWiley

Published: Dec 1, 2003

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