I consider voluntary disclosure of nonproprietary information. Established research presents two classes of models. Some authors assume that the manager can be sanctioned prohibitively high if he lies. Others assume cheap talk. I analyze a setting with positive but non-prohibitive punishments. In my scenario, misreporting is part of the information equilibrium. To assess the consequences of such misreporting, I present two distinct cases: If the capital market is already well informed about possible firm values prior to the disclosure, the majority of misreportings is detected. If the capital market has only very rough information, misreportings may lead to failures in the market’s valuation and thus damage investors.
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Article provided by Wolfgang Ballwieser, Managing editor of sbr, LMU Munich School of Management, University of Munich, Ludwigstr. 28/RG, D-80539 Munich, Germany in its journal Schmalenbach Business Review.
Volume (Year): 56 (2004) Issue (Month): 2 (April) Pages: 139-163 Download reference. The following formats are available: HTML,
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Find related papers by JEL classification: M4 - Business Administration and Business Economics; Marketing; Accounting - - Accounting G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games