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On the voluntary disclosure of redundant information

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  • NETL
  • NSTL
  • Elsevier
Why do firms engage in costly, voluntary disclosure of information which is subsumed by a later announcement? We consider a model in which the firm's manager can choose to disclose short-term information which becomes redundant later. When disclosure costs are sufficiently low, the manager discloses even if she only cares about the long-term price of the firm. Intuitively, by disclosing, she causes early investors to trade less aggressively, reducing price informativeness, which in turn increases information acquisition by late investors. The subsequent increase in acquisition more than offsets the initial decrease in price informativeness and, consequently, improves long term prices.

Costly voluntary disclosureInformation acquisitionRedundant information

Snehal Banerjee、Bradyn Breon-Drish、Ron Kaniel、Ilan Kremer

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Rady School of Management, UC San Diego, 9500 Gilman Dr, La Jolla, CA 92093, United States of America

Simon School of Business, Rochester University, Rochester, NY 14627, United States of America||Fanhai International School of Finance, Fudan, Shanghai 200001, China||Arison School of Business, Reichman University, Herzliya 4610101, Israel

Department of Economics, School of Business Administration, and Federmann Center for the Study of Rationality, The Hebrew University, Givat Ram, Jerusalem, 91904, Israel||University of Warwick, United Kingdom

2023

10.1016/j.jet.2023.105743

Journal of economic theory

Journal of economic theory

ISSN：0022-0531
年,卷(期)：2023.214(Dec.)
  • 36