Informational correlation and selective disclosure

Qiang Gong (), Jie Shuai and Huanxing Yang ()
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Qiang Gong: Zhongnan University of Economics and Law
Huanxing Yang: Ohio State University

Economic Theory, 2023, vol. 76, issue 2, No 9, 645-683

Abstract: Abstract We study a voluntary disclosure game in which a firm manager may learn private information about multiple aspects and can selectively disclose any subset of that information. A distinctive feature of our model is informational correlation: whether the manager is informed about one aspect is correlated with whether he is informed about the other aspect. We find that higher positive informational correlation makes partial disclosure less likely and reduces the firm’s perceived value under partial disclosure, whereas higher negative informational correlation leads to opposite effects. We also examine the implications of our results on stock prices.

Keywords: Asymmetric information; Voluntary disclosure; Stock prices; Multiple aspects; Informational correlation (search for similar items in EconPapers)
JEL-codes: D21 D82 G32 L25 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s00199-022-01473-x

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