Valuing Voluntary Disclosure using a Real Options Approach

Laura Delaney and Jacco Thijssen

Discussion Papers from Department of Economics, University of York

Abstract: This paper outlines a real options approach to valuing those announcements which are made by firms outside their legal requirements. From the firm's perspective, information is disclosed only if the manager of the firm is sufficiently certain that the market response to the announcement will have a positive impact on the value of the firm. When debt financing is possible it is found that the manager adopts a more transparent disclosure policy, thus violating the Modigliani-Miller theorem on irrelevance of capital structure on firm value.

Keywords: Voluntary Disclosure; Real Options; Modigliani-Miller Theorem. (search for similar items in EconPapers)
JEL-codes: C61 D81 M41 (search for similar items in EconPapers)
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:11/13

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