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Disclosure of proprietary information in the course of an acquisition

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  • Alfred Wagenhofer

Abstract

Proprietary information plays a crucial role in the process of selling a firm or an operation, particularly if the prospective buyer is a competitor. Favourable information increases the selling price, but increases competition in case the buyer does not buy, and vice versa. This paper explores equilibrium disclosure strategies in such a setting. If the information is verifiable then a high degree of uncertainty as to the buyer's intention or alternatives results in less disclosure. If the information is unverifiable then a high degree of uncertainty is necessary for any information transfer in equilibrium. If information can be verified by the seller, in equilibrium this will generally drive out unverified disclosure.

Suggested Citation

  • Alfred Wagenhofer, 2000. "Disclosure of proprietary information in the course of an acquisition," Accounting and Business Research, Taylor & Francis Journals, vol. 31(1), pages 57-69.
    • Handle: RePEc:taf:acctbr:v:31:y:2000:i:1:p:57-69
    DOI: 10.1080/00014788.2000.9729598
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    Cited by:

    1. Dobler, Michael, 2008. "Incentives for risk reporting -- A discretionary disclosure and cheap talk approach," The International Journal of Accounting, Elsevier, vol. 43(2), pages 184-206.

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