On the Disclosure of Half-Truths and the Duty to Update

Anne Beyer () and Ronald A. Dye ()
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Anne Beyer: Stanford University, Graduate School of Business, Stanford, California 94305
Ronald A. Dye: Northwestern University, Kellogg School of Management, Evanston, Illinois 60208

Management Science, 2023, vol. 69, issue 7, 4283-4311

Abstract: We develop a model of a manager’s equilibrium voluntary disclosure policy to study how that policy changes depending on whether the manager is prohibited from disclosing, or allowed to disclose, a half-truth; we also examine how the disclosure policy changes depending on whether the manager has a duty to update past disclosures. Among our results, we show that if a manager is prohibited from issuing half-truths, the manager discloses a wider array of information than if the manager is allowed to issue half-truths, and investors view the absence of disclosure more skeptically; we also show that imposing a duty to update on the manager does not affect the manager’s initial disclosures, but it results in the manager disclosing uniformly more information over time.

Keywords: half-truths; duty to update; voluntary disclosures; stock prices (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:69:y:2023:i:7:p:4283-4311

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