Market Performance Measures and Disclosure of Private Management Information in Capital Markets

Market Performance Measures and Disclosure of Private Management Information in Capital Markets Thispaper examines the optimal disclosure policyin a principal/agent setting in which investors and a managerdirectly receive pre-decision, non-contractible signals. Themanager's signal is more informative than the investors' signal.Under no disclosure, the market price provides contractible informationabout the investors' signal, whereas it does not reveal the investors'signal if the manager fully and truthfully discloses his signal.The Revelation Principle does not apply and we identify conditionsunder which no disclosure dominates full disclosure, and providea ``hurdle'' model in which partial disclosure strictly dominatesboth no and full disclosure. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Accounting Studies Springer Journals

Market Performance Measures and Disclosure of Private Management Information in Capital Markets

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Publisher
Springer Journals
Copyright
Copyright © 2000 by Kluwer Academic Publishers
Subject
Business and Management; Accounting/Auditing; Corporate Finance; Public Finance
ISSN
1380-6653
eISSN
1573-7136
D.O.I.
10.1023/A:1026545622749
Publisher site
See Article on Publisher Site

Abstract

Thispaper examines the optimal disclosure policyin a principal/agent setting in which investors and a managerdirectly receive pre-decision, non-contractible signals. Themanager's signal is more informative than the investors' signal.Under no disclosure, the market price provides contractible informationabout the investors' signal, whereas it does not reveal the investors'signal if the manager fully and truthfully discloses his signal.The Revelation Principle does not apply and we identify conditionsunder which no disclosure dominates full disclosure, and providea ``hurdle'' model in which partial disclosure strictly dominatesboth no and full disclosure.

Journal

Review of Accounting StudiesSpringer Journals

Published: Oct 16, 2004

References

  • Earnings Management and the Revelation Principle
    Arya, A.; Glover, J.; Sunder, S.
  • Sequential Communication in Agencies
    Christensen, P.O.; Feltham, G.A.

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