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 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 it is found that the manager adopts a more transparent disclosure policy, thus violating the Modigliani-Miller theorem on irrelevance of capital structure on firm value.
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Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 11/13.
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Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
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More information through EDIRC
Voluntary Disclosure; Real Options; Modigliani-Miller Theorem.;
Other versions of this item:
- Delaney, L. & Thijssen, J., 2011. "Valuing voluntary disclosure using a real options approach," Working Papers 11/06, Department of Economics, City University London.
- 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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