Voluntary Precision Disclosure and Endogenous Market Feedback

• 成果类型: Article
• 署名作者: Schneemeier, Jan
• 署名单位: Indiana University System; IU Kelley School of Business; Indiana University Bloomington
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.4577
• 发表日期: 2023
• 页码: 5618-5637
• 关键词: precision information; voluntary disclosure; information acquisition; market feedback

摘要

We explore a manager's incentives to disclose the precision of a signal about firm profitability. Voluntary disclosure of precision information encourages traders to acquire private information, increasing price informativeness and improving the firm's investment efficiency. We highlight a novel tradeoff: on the one hand, more precise public information crowds out traders' information acquisition by leveling the playing field. On the other hand, there can also be a crowding-in effect because high-precision disclosures indicate greater managerial confidence and higher investment, which increases the traders' value of information. The crowding-in effect can dominate if the firm discloses above average profitability. We derive testable predictions regarding the financial market consequences of supplemental disclosures that are informative about the precision or relevance of payoff-related signals.