Valuing voluntary disclosure using a real options approach
AbstractThis paper outlines a real options approach to valuing those announcements which are made by firms outside of their legal requirements. From the firm's perspective, information is disclosed only if the manager of the firm is sufficiently certain that the market response to the announcement will have a positive impact on the value of the firm. When debt financing is possible we find that the manager adopts a more transparent disclosure policy, thus violating the Modigliani-Miller theorem on irrelevance of capital structure.
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Bibliographic InfoPaper provided by Department of Economics, City University London in its series Working Papers with number 11/06.
Date of creation: 2011
Date of revision:
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Postal: Department of Economics, Social Sciences Building, City University London, Whiskin Street, London, EC1R 0JD, United Kingdom,
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Web page: http://www.city.ac.uk
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Voluntary disclosure; real options; Modigliani-Miller theorem;
Other versions of this item:
- Laura Delaney & Jacco J.J. Thijssen, . "Valuing Voluntary Disclosure using a Real Options Approach," Discussion Papers 11/13, Department of Economics, University of York.
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
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