Disclosure Policy and Industry Fluctuations

Jeremy Bertomeu () and Pierre Jinghong Liang ()
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Jeremy Bertomeu: Stan Ross Department of Accountancy, Zicklin School of Business, Baruch College, New York, New York 10010
Pierre Jinghong Liang: Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213; and China Academy of Financial Research, 200030 Shanghai, China

Management Science, 2015, vol. 61, issue 6, 1292-1305

Abstract: This paper examines voluntary disclosures in a repeated oligopoly and their association with price-setting behavior and industry profits along industrial fluctuations. The analysis focuses on the collectively optimal equilibrium among oligopoly firms. We show that, in industries that are highly concentrated or feature low cost of capital, nondisclosure is prevalent and results in stable product prices and high profit margins. Otherwise, firms may selectively disclose to soften competition in the product market. Under partial disclosure, firms withhold information during sharp industry expansions or declines. Consequently, the disclosure policy dampens the dissemination of shocks to the industry. This paper was accepted by Mary Barth, accounting .

Keywords: voluntary disclosure; industrial organization; competition; market structure; firm strategy; business cycles; information sharing (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:61:y:2015:i:6:p:1292-1305

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