On the Voluntary Disclosure of Redundant Information

Ron Kaniel, Snehal Banerjee, Bradyn Breon-Drish and Ilan Kremer

No 17760, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Why do firms engage in costly, voluntary disclosure of information which is subsumed by a later announcement? We consider a model in which the firm’s manager can choose to disclose short-term information which becomes redundant later. When disclosure costs are sufficiently low, the manager discloses even if she only cares about the long-term price of the firm. Intuitively, by disclosing, she causes early investors to trade less aggressively, reducing price informativeness, which in turn increases information acquisition by late investors. The subsequent increase in acquisition more than offsets the initial decrease in price informativeness and, consequently, improves long term prices.

JEL-codes: D21 D82 D83 D84 G32 (search for similar items in EconPapers)
Date: 2022-12
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Journal Article: On the voluntary disclosure of redundant information (2023)
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