Information relevance, reliability and disclosure

Xiao-Jun Zhang ()
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Xiao-Jun Zhang: University of California

Review of Accounting Studies, 2012, vol. 17, issue 1, No 8, 189-226

Abstract: Abstract This paper examines the relation between information’s properties, such as reliability and relevance, and public disclosure policy. It shows that the optimal accounting system often involves a carefully balanced combination of mandatory and voluntary disclosure, with mandatory reporting focused on more reliable information. The emphasis on reliability causes the welfare-maximizing mandatory report to consistently lag behind the financial market in incorporating value-relevant information.

Keywords: Reliability; Relevance; Mandatory reporting; Voluntary disclosure (search for similar items in EconPapers)
JEL-codes: D82 M41 (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/s11142-011-9170-7

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