False modesty: When disclosing good news looks bad

Is it always wise to disclose good news? Using a new statistical dominance condition, we show that if the receiver has any private receiver information then the weakest senders with good news gain the most from boasting about it. Hence the act of disclosing good news can paradoxically make the sender look bad. Nondisclosure by some or all senders is an equilibrium if standards for the news are sufficiently easy or if prior expectations without the news are sufficiently favorable. Full disclosure is the unique equilibrium if standards are sufficiently difficult or sufficiently fine, or if prior expectations are sufficiently unfavorable. Since the sender has a legitimate fear of looking overly anxious to reveal good news, mandating that the sender disclose the news can help the sender. The model’s predictions are consistent with when faculty avoid using titles such as “Dr.” or “Professor” in voicemail greetings and course syllabi.     

Information Acquisition and Strategic Disclosure in Oligopoly

I study the incentives of oligopolists to acquire and disclose information on a common demand intercept. Because firms may fail to acquire information even when they invest in information acquisition, firms can credibly conceal unfavorable news while disclosing favorable news. Firms may earn higher expected profits under such a selective disclosure regime than under the regimes where firms commit to share all or no information. In particular, this holds under both Cournot and Bertrand competition, if the firms have sufficiently flat information acquisition cost functions. For steeper cost functions Cournot duopolists prefer strategic disclosure, if their goods are sufficiently differentiated.     

On the informed seller problem: optimal information disclosure

We consider a revenue-maximizing seller who, before proposing a mechanism to sell her object(s), observes a vector of signals correlated with buyers’ valuations. Each buyer knows only the signal that the seller observes about him, but not the signals she observes about other buyers. The seller first chooses how to disclose her information and then chooses a revenue-maximizing mechanism. We allow for very general disclosure policies, that can be random, public, private, or any mixture of these possibilities. Through the disclosure of information privately, the seller can create correlation in buyers’ private information, which then consist of valuations plus beliefs. For the standard independent private values model, we show that information revelation is irrelevant: irrespective of the disclosure policy an optimal mechanism for this informed seller generates expected revenue that is equal to her maximal revenue under full information disclosure. For more general allocation environments that allow also for interdependent, for common values, and for multiple items, disclosure policies may matter, and the best the seller can do is to disclose no information at all.     

Potential competition and quality disclosure

This study presents a model of quality disclosure in which an incumbent, through its quality and disclosure choices, influences the potential that a new entrant enters the market. In this regard, we consider a sequential framework in which the incumbent chooses its quality and decides whether to disclose it to the market; subsequently, the entrant makes the same decisions, if it enters the market. We show that the potential competition can create strategic incentives for the incumbent to choose nondisclosure, because the availability of information about the incumbent's quality promotes entry by enhancing the entrant's expected profit from the market. In addition, an analysis of the effects of mandatory disclosure laws suggests that they can be effective in encouraging new market entrants and in improving the product quality of established firms.     

Voluntary Disclosure and Analyst Forecast

Empiricists document that firms more often voluntarily disclose bad news than good news and link this pessimism to managers’ increased incentives not to fall short of earnings expectations. This paper analyzes the voluntary disclosure of a manager’s private information by explicitly considering her incentives to meet or beat an analyst’s earnings forecast. The model predicts that managers who face strong incentives to meet or beat these forecasts more frequently disclose bad news than good news in order to guide analysts’ expectations about future earnings downward. This pessimism is higher in markets with less informed managers and may hold even if the manager has strong incentives for high stock prices and meet-or-beat incentives are comparably low.     

Strategic Disclosure of Intermediate Research Results

We analyze the incentives to disclose intermediate research results during the course of a patent contest. Despite knowledge spillovers, the leading innovator sometimes discloses to signal commitment to the project, and so potentially inducing a rival's exit. Surprisingly, when development costs are low the leading innovator does not need to disclose to induce the same strategic deterrence effect as that which arises from disclosure. Taking into account wasteful duplication of R&D effort, a patent office can increase welfare by choosing the probability of granting a contested patent and so altering the proportion of rivals that the leading innovator deters.     

Beyond symbolic and substantive: Strategic disclosure of corporate environmental information in China

Under increasing regulatory pressure to disclose environmental impacts, corporate environmental information disclosure (EID) is becoming more prevalent. However, the motives for EID and disclosure approaches (i.e., symbolic or substantive) remain controversial. Using a sample of data for 742 listed manufacturing firms in China across 3 years, we provide evidence to show that the level of EID is significantly positively associated with a firm's advertising intensity and that firms in moderately competitive industries have a higher propensity for adopting an EID‐based differentiated strategy than firms in stronger or weaker competitive industries. We also find that firms that are more sensitive to environmental issues strategically understate their environmental impact when directly facing consumers. Our results suggest that the implementation of corporate EID is strategic and that firms have strong market motives, even under regulatory pressure to demonstrate legitimacy. We discuss this study's contributions to research on EID theory and implications for strategic EID management.     

Voluntary Disclosure by State-owned Enterprises Listed on the Stock Exchange of Hong Kong

This study examines the impact of international capital market pressures on the voluntary disclosure of three types of information (strategic, financial, and non-financial) in the annual reports of former wholly state-owned People's Republic of China (PRC) enterprises, listed on the Stock Exchange of Hong Kong (SEHK). Consistent with a cost­benefit framework, we find that PRC H-Share firms disclose significantly more strategic and financial information than other SEHK firms. Additional analysis of disclosures in their home listings on the PRC exchanges, however, suggests an alternative explanation. The fact that these firms have been selected for "showcasing" in international capital markets may also play a role in our findings. While H-Share firm disclosures in the PRC also appear sensitive to management's assessment of the associated costs, the magnitude of differences across listing locations suggests that disclosure practices on the SEHK may also reflect the effects of state-encouraged disclosure policies. Our findings contribute to the understanding of disclosure behavior among former wholly state-owned enterprises and to the emerging literature on the efficacy of the privatization process.     

Disclosure protection of microdata: problems and solutions

National statistical offices meet an increasing demand for the dissemination of data sets containing individual data on respondents. This trend may cause problems with respect to the care taken not to disclose data about individuals. Therefore the risk of disclosure of each microdata set to be released should be assessed. If this risk is too high, measures have to be taken to protect the data set. This contribution describes the disclosure problem, and explains why it is a real problem. Using the concept of uniqueness, some theory is developed which may help to establish the risk of identification. It turns out that useful microdata sets can only be released if some of the disclosure risks are dealt with by legal arrangements, rather than by restrictions on the data to be released.     

Developing a Reputation for Reticence

A sender who has disclosable information with probability less than one may partially conceal bad news by choosing to withhold information and pooling with uninformed types. The success of this strategy depends on receivers' beliefs about the probability that the sender has disclosable news. In a dynamic context, informed senders try to cultivate a reputation for reticence either by concealing good news along with the bad, or by concealing some good news and disclosing some bad news. A reputation for reticence is valuable because it makes receivers less skeptical of past or future nondisclosures. The model provides insight into the choice by firms such as Google not to disclose quarterly earnings guidance to analysts, as well as Tony Blair's reticence over his son's vaccine record during the measles–mumps–rubella scare in the United Kingdom.     

Rivalry information acquisition and disclosure

In the recent past, there have been numerous scandals around poor product qualities in various industries. Although it can be easily rationalized why bad practices have not been reported by the inflictors themselves, it is more difficult to understand why the non‐inflicting competitors did not report their rivals' acts. In this paper, we study these competitors' incentives to acquire and to disclose information on the quality of their rivals' products and question when we can leave the information disclosure process to the competitive pressure of markets and when there is a need for governmental intervention. We find that low quality levels can be disclosed in markets that exhibit negative spill‐over effects, but should not be expected to be disclosed in markets that exhibit a positive spill‐over effect. A regulatory policy on quality testing and disclosure may be more effective in the latter type of market.     

Persuasion under costly learning

A Sender (seller) tries to persuade a rationally inattentive Receiver (buyer) to take a particular action (e.g., buying). Learning is costly for the Receiver who can choose to process strictly less information than what the sender provides. In a binary-action binary-state model, we show that optimal disclosure involves information distortion, but to a lesser extent than the case without learning costs; meanwhile, the Receiver processes less information than what he would under full disclosure. We also find that the Receiver can leverage his potential inattention to attain a higher equilibrium payoff than the perfectly attentive case. While the Sender is always worse off when facing a less attentive Receiver, the amount of information processed in equilibrium varies with learning costs in a non-monotone fashion.     

Manufacturer product quality information disclosure with channel encroachment in the E-commerce age

This study investigates the interplay between a manufacturer's quality disclosure and channel encroachment. We show that there exists a U-shaped pattern between the manufacturer's payoff and the disclosure cost, whereas the retailer's payoff exhibits a more complicated and nonmonotonic relationship with respect to the disclosure cost. Both firms may benefit from the increase of the disclosure cost when it falls into the intermediate range and when the channel substitution rate is not too low. The increase of the encroachment cost always hurts the manufacturer, and it may even hurt the retailer if it is medium and if the channel substitution rate is low.     

Perspectives on Disability Disclosure: The Importance of Employer Practices and Workplace Climate

Disclosing a disability to a potential or current employer is a very personal decision, with potentially far-reaching consequences for both the employer and employee. Disability disclosure can assure that employees receive appropriate workplace accommodations, and can help employers respond more effectively to diversity and inclusion initiatives aimed at increasing the hiring and retention of individuals with disabilities. However, disclosure may also result in negative employment consequences for employees, such as lowered supervisor expectations, isolation from co-workers, and increased likelihood of termination. Given demographic trends related to disability in the labor force and recent initiatives to increase the employment of individuals with disabilities, it is increasingly important that employers create an environment that encourages disclosure and reduces the likelihood of negative consequences for employees and applicants who disclose their disabilities. This paper presents the findings of a survey of individuals with disabilities focused on identifying and better understanding the factors that influence the disclosure decision. Results highlight the barriers and facilitators that influence individuals’ decision to disclose and the important role that employers, managers, and workplace climate play in the decision. Implications for employer policy and practice are also discussed.     

The Role of Information in Building Reputation in an Investment/Trust Game

This article analyses the role of information in building reputation in an investment/trust game. The model allows for information asymmetry in a finitely repeated sender–receiver game and solves for sequential equilibrium to show that if there are some trustworthy managers who always disclose their private information and choose to return a fair proportion of the firm's income as dividend to the investor, then a rational manager will mimic such behaviour in an attempt to earn a reputation for being trustworthy. The rational manager will mimic with probability 1 in the early periods of the game. The investor, too, will invest with probability 1 in these periods. However, in the later periods, the rational manager will mimic with a certain probability strictly less than 1. The probability will be such that it will make the investor indifferent between investing and not investing, and he, in turn, will invest with a probability (strictly less than 1) that will make the rational manager indifferent between mimicking and not mimicking; that is, the game will begin with pure-strategy play but will switch to mixed-strategy play. There is one exception, though: when the investor's ex ante beliefs about the manager's trustworthiness are exceptionally high, the game will continue in a pure strategy, and the switch to mixed-strategy play will never occur. Identical results obtain if the manager's choice of whether to share his private information with the investor is replaced by exogenously imposed information sharing.     

Disclosure Checklists and Auditors’ Judgments of Aggressive Accounting

This study investigates if auditors who feel accountable to management (as opposed to the audit committee) are more susceptible to pro-client bias after using a disclosure checklist. We theorize that the use of a disclosure checklist, even though it is uninformative about the aggressiveness of the accounting methods used, can influence auditors’ judgments of the acceptability of aggressive reporting by inducing a less critical state of mind. We propose that this less critical state of mind is reflected in higher levels of pro-client bias, particularly when management is the appointing party. Our experimental data for two cases, obtained from experienced auditors working at a Big Four audit firm, support this prediction. Our findings imply that threats to auditor independence are more subtle than has often been assumed.     

上市公司年报语调操纵、非效率投资与盈余管理

基于行为财务理论和委托代理理论，研究了管理者文本信息操纵和数字信息操纵之间的关系。以我国2010—2016年间A股上市公司年报为研究对象，借助网络爬虫（Web Crawler）提取并分析年报中的管理层语调。研究发现：管理者在年报中的语调操纵对盈余管理起到了配合作用。进一步研究发现，语调操纵对盈余管理的配合效应将随着非效率投资程度的增加而增强。研究结论表明，管理者的数字信息操纵和文本信息操纵是相互配合的，它们共同起到了掩盖管理者动机的目的。     

Corporate Incentives to Disclose Carbon Information: Evidence from the CDP Global 500 Report

We investigate how the Global 500 companies respond to the challenge of climate change with regard to their carbon disclosure strategies. This paper is motivated by a growing body of research that examines the role of large companies in carbon disclosure responsibility and practices. We consider the impact of social, financial market, economic, regulatory, and institutional factors on the motivation to voluntarily participate in the 2009 Carbon Disclosure Project. We find that economic pressure is significantly associated with the decision. That is, companies facing direct economic consequence are more likely to disclose. Companies in greenhouse gas (GHG) intensive sectors show the same tendency. In addition, big companies have a higher propensity for disclosing, suggesting that social pressure plays an important role. We also provide possible explanations as to why a large proportion of our sample firms refuse to disclose. Furthermore, our results suggest that the proxies for information needs of investors are not associated with a higher propensity to disclose the amount of their emission footprints. In sum, it appears that the major driving force for climate change disclosure comes from the general public and government rather than from the other major stakeholders such as shareholders and debtholders. Our results are robust after controlling for other influences.     

Disclosing Multiple Product Attributes

How do multiple attributes of a product jointly determine a seller's disclosure incentives? I model a monopolist whose product is characterized by vertical quality and a horizontal attribute. Contrary to the unraveling theory, the monopolist in equilibrium does not always choose disclosure. When the product's quality is common knowledge, a monopolist with higher quality is less likely to disclose the horizontal attribute. Notably, the monopolist may choose nondisclosure when his product has the highest quality. The results shed light on governments' mandatory disclosure policies and companies' marketing strategies.     

基于核心竞争力的信息披露管理研究

上市公司的信息披露是一种战略管理行为.信息披露战略管理不仅能增加公司信息披露的可理解性,而且有利于树立公司形象,并最终有利于实现公司竞争战略目标.信息披露战略管理要求依据竞争对手、上下游公司以及竞争环境的变化及时调整公司的信息披露策略,上市公司对信息披露的管理可以跨越公司边界,向上下游公司以及竞争对手延伸.