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Discussion of “How disclosure quality affects the level of information asymmetry”

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  • Yonca Ertimur

    (Duke University)

Abstract

Brown and Hillegeist (2007) examine how disclosure quality relates to information asymmetry. Specifically, the authors show that the negative association between the overall quality of a firm’s disclosures and the average level of information asymmetry is primarily driven by the negative association between disclosure quality and the frequency of information events. My discussion focuses on issues surrounding proxies for information asymmetry and disclosure quality the authors use. I also suggest some venues for future research.

Suggested Citation

  • Yonca Ertimur, 2007. "Discussion of “How disclosure quality affects the level of information asymmetry”," Review of Accounting Studies, Springer, vol. 12(2), pages 479-485, September.
    • Handle: RePEc:spr:reaccs:v:12:y:2007:i:2:d:10.1007_s11142-007-9028-1
    DOI: 10.1007/s11142-007-9028-1
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    References listed on IDEAS

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    1. David Easley & Soeren Hvidkjaer & Maureen O'Hara, 2002. "Is Information Risk a Determinant of Asset Returns?," Journal of Finance, American Finance Association, vol. 57(5), pages 2185-2221, October.
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    3. Paul M. Healy & Amy P. Hutton & Krishna G. Palepu, 1999. "Stock Performance and Intermediation Changes Surrounding Sustained Increases in Disclosure," Contemporary Accounting Research, John Wiley & Sons, vol. 16(3), pages 485-520, September.
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    5. Huang, Roger D & Stoll, Hans R, 1997. "The Components of the Bid-Ask Spread: A General Approach," The Review of Financial Studies, Society for Financial Studies, vol. 10(4), pages 995-1034.
    6. Easley, David & Kiefer, Nicholas M & O'Hara, Maureen, 1997. "One Day in the Life of a Very Common Stock," The Review of Financial Studies, Society for Financial Studies, vol. 10(3), pages 805-835.
    7. Merton, Robert C, 1987. "A Simple Model of Capital Market Equilibrium with Incomplete Information," Journal of Finance, American Finance Association, vol. 42(3), pages 483-510, July.
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    9. Stephen Brown & Stephen A. Hillegeist, 2007. "How disclosure quality affects the level of information asymmetry," Review of Accounting Studies, Springer, vol. 12(2), pages 443-477, September.
    10. Core, John E., 2001. "A review of the empirical disclosure literature: discussion," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 441-456, September.
    11. George, Thomas J & Kaul, Gautam & Nimalendran, M, 1991. "Estimation of the Bid-Ask Spread and Its Components: A New Approach," The Review of Financial Studies, Society for Financial Studies, vol. 4(4), pages 623-656.
    12. Verrecchia, Re, 1982. "The Use Of Mathematical-Models In Financial Accounting," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 20, pages 1-42.
    13. Brown, Stephen & Hillegeist, Stephen A. & Lo, Kin, 2004. "Conference calls and information asymmetry," Journal of Accounting and Economics, Elsevier, vol. 37(3), pages 343-366, September.
    14. Diamond, Douglas W, 1985. "Optimal Release of Information by Firms," Journal of Finance, American Finance Association, vol. 40(4), pages 1071-1094, September.
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